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The following is an excerpt from a 10-K SEC Filing, filed by ALBERTSONS INC /DE/ on 3/29/2004.
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ALBERTSONS INC /DE/ - 10-K - 20040329 - LEGAL_PROCEEDINGS

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 Albertsons as well as 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 Court of Appeal of the State of California Second Appellate District decision in Ralphs Grocery Co. vs. Superior Court, 112 Cal. App. 4th 1090 (2003) addressed certain of the issues advanced by the plaintiffs in this lawsuit. On February 18, 2004, the California Supreme Court declined to review this decision. Certain of the issues were decided by the appellate court favorably to the Company's position and certain were decided adverse to the Company's position. There remain numerous issues to be resolved by the trial court. The Company believes it has strong defenses on these issues and the Company is vigorously advancing its position. 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 of the Rocher class decertification issue 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., an indirect wholly owned subsidiary of the Company and Dominick's Finer Foods, Inc. in the Circuit Court of Cook County, Illinois alleging milk price fixing (Maureen Baker et al. v. Jewel Food Stores, Inc. and Dominick's Finer Foods, Inc., Case No. 00L 009664). In February 2003, the trial court found in favor of the defendants and dismissed the case with prejudice. Thereafter, the plaintiffs appealed. Briefs have now been filed for the appeal and the matter is pending in the Illinois Appellate Court. 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 September 2000 an agreement was 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

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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 Company mailed notices of the settlement and claims forms to approximately 70,500 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 claims administrator was able to assign a value to approximately 1,000 claims, which amount to a total of approximately $14, although the value of many of those claims is still subject to challenge by the Company. A second claim process was ordered by the court, but the parties are still waiting for final instructions from the Court. 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.

On November 1, 2001, the Environmental Protection Agency ("EPA") notified Jewel Food Stores, Inc., an indirect wholly-owned subsidiary of the Company, of alleged violations of the Clean Air Act. No notice of violation was issued, but the Company and the EPA entered into discussions that are expected to result in a consent decree establishing technical protocols for the refrigerant management program; setting a penalty of $0.1; and requiring Jewel to accelerate the industry's future obligation to substitute non-ozone depleting refrigerant for existing refrigerant in some of the Jewel stores.

On November 20, 2003, three consumers filed an action in California state court (Kerner, et al. v. Albertsons, Inc.; Ralphs Grocery Company; and Safeway Inc., dba Vons, a Safeway Company, Los Angeles Superior Court, Case No. BC306456), claiming that certain provisions of the agreements (the "Labor Dispute Agreements") between the Company, The Kroger Co. and Safeway Inc. (the "Retailers") which provided for "lock-outs" in the event that any Retailer was struck at any or all of its southern California facilities when the other Retailers were not and contained a provision designed to prevent the union from placing disproportionate pressure on one or more Retailer by picketing such Retailer(s) but not the other Retailer(s), violate California's Cartwright Act and the Unfair Competition Law. The lawsuit seeks unspecified monetary damages and injunctive relief. On February 2, 2004, the Attorney General for the State of California filed an action in Los Angeles federal court (California, ex rel Lockyer v. Safeway, Inc. dba Vons, a Safeway Company; Albertsons, Inc. and Ralphs Grocery Company, a division of The Kroger Co., United States District Court Central District of California, Case No. CV04-0687) claiming that certain provisions of the Labor Dispute Agreements violate section 1 of the Sherman Act. The lawsuit seeks declarative and injunctive relief. The Company filed its answer on February 24, 2004. The Company has strong defenses against these lawsuits and is vigorously defending them. Although these lawsuits are subject to 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 actions 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. 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.

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Item 3A. Executive Officers of the Registrant.

Executive and Reporting Officers

                                                                                        Date First Appointed
                                  Age as of                                              as an Executive or
           Name                   3/26/04                Position                         Reporting Officer
           ----                   ---------              --------                       --------------------

Lawrence R. Johnston                 55    Chairman of the Board, Chief Executive              04/23/01
                                           Officer and President

Robert C. Butler                     55    Executive Vice President, Food Operations           03/21/00
                                           and President, Intermountain West Division

Romeo R. Cefalo                      54    Executive Vice President, Real Estate,              03/21/00
                                           Construction, Store Development and New
                                           Formats

Robert J. Dunst, Jr.                 43    Executive Vice President and Chief                  11/19/01
                                           Technology Officer

Clarence J. Gabriel                  50    Executive Vice President, Supply Chain              01/13/03

Kathy J. Herbert                     50    Executive Vice President, Human Resources           09/17/01

John R. Sims                         54    Executive Vice President and                        03/25/02
                                           General Counsel

Felicia D. Thornton                  40    Executive Vice President and Chief                  08/22/01
                                           Financial Officer

Kevin H. Tripp                       49    Executive Vice President, Operations and            12/11/00
                                           Pharmacy

Eric J. Cremers                      40    Senior Vice President, Corporate Strategy           07/15/02
                                           and Business Development

James F. Gentile                     52    Senior Vice President, Six Sigma Quality            02/20/04

Susan M. Neumann                     50    Senior Vice President, Education,                   11/20/03
                                           Communications and Public Affairs

Pamela S. Powell                     52    Senior Vice President, Customer Service             02/20/04

Peter F. Collins                     39    Group Vice President and Controller                 01/15/03

Lawrence R. Johnston has served as President since July 24, 2003 and 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.

Robert C. Butler became Executive Vice President, Food Operations and President, Intermountain West Division on February 20, 2004. Previously he served as Executive Vice President, Operations from March 21, 2000; Senior Vice President, Merchandising from June 23, 1999 and Vice President, Southern California Division from 1996.

Romeo R. Cefalo became Executive Vice President, Real Estate, Construction, Store Development and New Formats on February 20, 2004. Previously he served as Executive Vice President, Operations from March 21, 2000; 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.

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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. (food and drug retailing) 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. (returns management solutions for direct retailers) 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 Albertsons from April 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. (department store retailing) from 1990.

Felicia D. Thornton became Executive Vice President and Chief Financial Officer on August 22, 2001. Previously she was a business consultant for HASC (private real estate holdings) from January 2001; Group Vice President, The Kroger Co. (food and drug retailing) from February 1999 and Group Vice President, Corporate Planning and Accounting, The 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 11, 2000; President, Drug Region from June 1999; and Executive Vice President and General Manager, American Drug Stores from November 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 (investment banking) from 1999 and Vice President, Strategy and Corporate Development, Pillsbury Co. (food manufacturing) from 1996.

James F. Gentile became Senior Vice President, Six Sigma Quality on February 20, 2004. Previously he served as President, Northern California Division from August 2002; Senior Vice President, Marketing - Midwest Division from February 2001; Vice President, Grocery and General Merchandise - Midwest Division from July 2001 and Vice President, Procurement - Midwest Division from 1994.

Susan M. Neumann was promoted to Senior Vice President, Education, Communications and Public Affairs on November 20, 2003. Previously she served as Group Vice President, Communications and Education from January 2002 and Vice President, Communications from January 1996.

Pamela S. Powell was promoted to Senior Vice President, Customer Service on February 20, 2004. Previously she served as Group Vice President, Marketing from May 2000; Vice President, Marketing from June 1999; and Senior Vice President, Sales & Marketing Support, American Stores Company from May 1998.

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 (public accounting) from September 1998; and Senior Manager, Arthur Andersen LLP from September 1995.

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

No matters were submitted during the fourth quarter of 2003 to a vote of security holders through the solicitation of proxies or otherwise.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

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 22, 2004, there were approximately 29,235 holders of record. The following table sets forth the reported high and low stock prices by quarter as reported by the NYSE and dividends declared:

                                      Common Stock Market Price
                                                                           Dividends
2003                                    High               Low              Declared
-----------------------                 ----               ---              --------
       Fourth Quarter                 $24.19            $19.50                 $0.19
       Third Quarter                   23.65             18.40                  0.19
       Second Quarter                  21.91             17.91                  0.19
       First Quarter                   21.71             17.76                  0.19

2002
-----------------------

       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

Dividends
The Company has paid cash dividends on its Common Stock since 1959. 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.

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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.

                                          52 Weeks       52 Weeks         52 Weeks        52 Weeks         53 Weeks
(Dollars in millions,                  January 29,    January 30,      January 31,     February 1,      February 3,
  except per share data)                      2004           2003             2002            2001             2000
---------------------------------- ---------------- -------------- ---------------- --------------- ---------------
Operating Results:
Sales                                     $ 35,436       $ 35,626         $ 36,605        $ 35,501         $ 36,326
Earnings from continuing operations            556            865              496             746              395
Net earnings                                   556            485              501             765              404
Net earnings as a percent to sales            1.57%          1.36%            1.38%           2.15%            1.11%

Common Stock Data:
Earnings per share from continuing
  operations:
  Basic                                   $   1.51       $   2.18         $   1.22        $   1.78         $   0.93
  Diluted                                     1.51           2.17             1.22            1.78             0.92

Net earnings per share:
  Basic                                       1.51           1.22             1.23            1.83             0.96
  Diluted                                     1.51           1.22             1.23            1.83             0.95

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

Financial Position:
Total assets                              $ 15,394       $ 15,211         $ 15,981        $ 16,094         $ 15,719
Long-term debt and capitalized
  lease obligations                          4,804          5,257            5,336           5,942            4,990

Other Year End Statistics:
Number of stores                             2,305          2,287            2,421           2,512            2,492

The operating results include two significant restructuring initiatives that were implemented in 2001 and 2002 (refer to Note 6 "Restructuring" and Note
5 "Discontinued Operations/Market Exits" in the notes to the accompanying consolidated financial statements). Although these initiatives 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 2002 restructuring that resulted in the divestiture of 95 stores and 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 divested under the 2001 restructuring are included in continuing operations of the Company's financial statements for the periods prior to their sale or closure.

The Company adopted SFAS No. 142 "Goodwill and Other Intangible Assets" in 2002 (refer to Note 12 "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 was accounted for as a pooling of interests.

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

Overview
During the past three years, the Company announced a variety of actions and programs the leadership team has identified and implemented with the intent 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. The food, drug and general merchandise retailing industry continues to experience intense competition with numerous competitors. The Company is competing through planned investments in pricing and promotion, product differentiation and customer service. The Company's 2003 results of operations were unfavorably impacted by a labor dispute with its retail union associates in southern California that began on October 12, 2003 and lasted through the remainder of the Company's fiscal year which ended on January 29, 2004 ("Labor Dispute").

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

Southern California Labor Dispute
Pursuant to the terms of a multi-employer bargaining arrangement among the Company, The Kroger Co. and Safeway Inc. (the "Retailers"), the Company "locked out" its retail union associates in southern California food stores on October 12, 2003. This followed the United Food and Commercial Workers' ("UFCW") decision to conduct a strike at Safeway Inc.'s southern California Vons Supermarket stores on October 11, 2003.

In connection with the decision of the Retailers to engage in multi-employer bargaining with the UFCW, the Retailers entered into agreements ("Labor Dispute Agreements") which provided for lock-outs in the event that any Retailer was struck at any or all of its facilities in southern California when the other Retailers were not and contained a provision designed to prevent the union from placing disproportionate pressure on one or more Retailer by picketing such Retailer(s) but not the other Retailer(s). Payments are expected to be made or received under the Labor Dispute Agreements during the first half of fiscal 2004 at which time only net amounts will be paid.

In November 2003, three consumers filed an action in California state court claiming that the Labor Dispute Agreements violate antitrust and consumer protection laws. In February 2004, the California Attorney General filed suit in federal court claiming that certain provisions of the Labor Dispute Agreements violate antitrust law. The Company believes that similar agreements are not uncommon in joint bargaining situations and that the Labor Dispute Agreements are lawful. The Company is vigorously defending itself in these proceedings.

The Labor Dispute resulted in decreased sales in the Company's southern California combination food and drug and conventional food stores and decreased margin as a result of inventory shrink, sales mix changes and increased distribution costs. The Company also incurred additional costs for hiring and training temporary workers, travel costs for temporarily reassigned key associates from other Company divisions, increased store security and legal costs. These impacts were partially offset by reduced labor expenses and the estimated benefit from the multi-employer bargaining agreement discussed above. The Labor Dispute ended with the ratification of a new collective bargaining agreement on February 28, 2004. Under the terms of the new collective bargaining agreement, the Company agreed to fund a one-time contribution to the union health and welfare fund of approximately $36 as well as to make strike ratification bonus payments of approximately $10. These amounts will be charged to earnings in the first quarter of fiscal year 2004. Other specific impacts of the Labor Dispute on the Company's 2003 results of operations are discussed below.

Acquisition of Shaw's
On March 25, 2004, the Company entered into a stock purchase agreement with J Sainsbury plc and JS USA Holdings Inc. to acquire all of the outstanding capital stock of the entities which conduct J Sainsbury plc's U.S. retail grocery store business for approximately $2,100 in cash, as well as the assumption of approximately $368 in capital leases. The Company intends to use a combination of cash-on-hand and commercial paper to finance a portion of the purchase price of the acquisition. The commercial paper the Company intends to issue will be backed by the Company's existing credit facilities and/or a new senior revolving bridge facility. The Company's also contemplating various financing alternatives, including the issuance of debt and/or equity, to finance a portion of the purchase price and/or to repay some of the commercial paper.

The operations to be acquired consist of approximately 200 grocery stores in the New England area operated under the banners Shaw's and Star Markets. The operations to be acquired ("Shaw's") had sales of approximately $4,600 for the fiscal year ended February 28, 2004 and approximately $4,400 for the fiscal year ended March 1, 2003.

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The acquisition is expected to close in the second quarter of 2004 following the satisfaction or waiver of certain closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act and Shaw's fiscal year ended February 28, 2004 financial statement audit reflecting a specified minimum EBITDA. Because of the goodwill that is expected to be generated as a result of the acquisition, the Company will have to obtain prospective waivers from the lenders under two of the Company's existing credit facilities in order to remain in compliance with the consolidated tangible net worth covenant contained in the agreements. No amounts were outstanding under these facilities as of January 29, 2004.

Strategic Imperatives
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 of 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 monitored by a member of executive management. The Company committed to achieve annual cost reductions and cost avoidance of $750 by the end of 2004. By the end of 2003, the Company had achieved $609 of the $750 cost reduction goal. In February 2004, the Company announced that it had raised its total cost-out goal to $1,000 by the end of 2005. This additional $250 in cost savings is expected to be achieved through new supply chain initiatives.

2) Maximize Return on Invested Capital. The Company has a formal process to review and measure all significant investments in corporate assets. The Company's goal is to hold a number one or two 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 these reviews, the Company closed or disposed of 165 underperforming stores, sold 80 non-core New England Osco drugstores and reduced its division offices from 19 to 15 in 2001. In 2002 the Company exited four underperforming markets resulting in the sale or closure of 95 stores, two distribution centers and the reduction of its division offices from 15 to 11. In 2003 the Company closed 61 underperforming stores. On January 30, 2004, the Company announced a new organizational structure in its Dallas/Fort Worth division intended to eliminate layers of management and streamline operations and, on February 20, 2004, the Company announced plans to further consolidate its 11 divisions to seven and add an eighth division to develop new formats, including price impact stores.

3) Customer-focused Approach to Growth. The Company intends to invest many of the savings from its 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:

o A company-wide "Service First, Second to None" program to reinvigorate the employees' focus on customer service.
o The "Focus on Fresh" initiative to improve the delivery of fresh foods throughout the Company's fresh departments.
o A decade-long development of the dual branding format that provides food and drugstore offerings in one location under multiple banners.

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 by 2007. 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. In 2003, the first two phases of the Company's new financial system were completed and a new online recruitment tool was rolled out providing consistent processes and automation that transformed the way Albertsons identifies, interviews and hires quality associates across the enterprise. Technology has been deployed in approximately 384 stores in "self-checkout" lanes, providing customers with the option to complete their shopping trips electronically. The Company has also been piloting a handheld scanner that the Company describes as the Shop N Scan program that allows customers to scan merchandise as they walk through and shop a store. The Company has also invested in the technology to drive its supply chain initiatives. Late in fiscal 2003, the Company signed an agreement for several planning and analytical modules to improve supply chain efficiency. In March 2004, the Company launched a Radio Frequency Identification (RFID) test program intended to improve efficiencies in consumer demand chain management.

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5) Energized Associates. The Albertsons leadership team is charged with creating an uplifting atmosphere for associates and to inspire positive attitudes throughout the Company. To ensure that associates are energized and motivated to do their best work, 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. Albertsons is 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.

Results of Operations
Sales for 2003 were $35,436 compared to $35,626 in 2002 and $36,605 in 2001. The following table sets forth certain Statement of Earnings components expressed as a percent to sales and the year-to-year percentage changes in the amounts of such components:

                                                                                   Percentage Change
                                                      Percent To Sales             Of Dollar Amounts
----------------------------------------- -------------------------------- ------------------------------
                                               2003       2002       2001   2003 vs. 2002  2002 vs. 2001
----------------------------------------- ---------- ---------- ---------- --------------- --------------
Sales                                        100.00     100.00     100.00            (0.5)          (2.7)
Gross profit                                  28.59      29.13      28.48            (2.4)          (0.5)
Selling, general and administrative
   expenses                                   24.90      24.13      23.85             2.6           (1.5)
Restructuring (credits) charges               (0.03)     (0.10)      1.28            n.m.           n.m.
Gain on sale of New England Osco
   drugstores                                     -          -      (0.15)           n.m.           n.m.
Interest expense, net                          1.15       1.11       1.16             3.3           (6.8)
Earnings from continuing operations
   before income taxes                         2.56       3.94       2.36           (35.5)          62.8
Earnings from continuing operations            1.57       2.43       1.36           (35.7)          74.4
(Loss) earnings from discontinued
   operations                                     -      (0.80)      0.02            n.m.           n.m.
Cumulative effect of change in
   accounting principle, net                      -      (0.26)         -            n.m.           n.m.
Net earnings                                   1.57       1.36       1.38            14.6            3.2
    n.m. - not meaningful

Sales decreased $190 in 2003 as compared to 2002 primarily due to the Labor Dispute. The Labor Dispute resulted in decreased sales in the Company's southern California combination food and drug and conventional stores. These decreases were partially offset by an increased number of operating stores in 2003 as compared to 2002. In 2003, identical store sales decreased 2.8% as compared to 2002. Identical stores are defined as stores that have been in operation for two full fiscal years. Comparable store sales, which uses the same store base as the identical store sales computation except it includes replacement stores, decreased 2.4% in 2003 as compared to 2002. Excluding food stores in the Company's Southern California Division for the last 110 days of 2003 and 2002, identical store sales decreased 0.5% and comparable store sales decreased 0.1% in 2003 as compared to 2002. Management estimates that overall inflation in products the Company sells was 0.5% in the 12 months ended January 29, 2004 as compared to an overall deflation of 0.1% in the 12 months ended January 30, 2003.

Despite the year to year declines in identical and comparable store sales, when adjusted for the Labor Dispute the Company saw improvements in both identical and comparable store sales in the second half of 2003 as compared to the first half of 2003.

The following table reconciles actual identical store sales and comparable store sales to adjusted identical store sales and comparable store sales as presented herein. The Company presents these non-GAAP financial measures because it believes a comparison of actual to adjusted store sales data is useful to investors to communicate management's belief of the impact of the Labor Dispute on trends in sales experienced during the last 110 days of 2003.

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                                                       Actual Identical       Labor                Adjusted
                                                         Store Sales         Dispute               Identical
                                                                           Adjustment             Store Sales
------------------------------------------------------ ------------------ --------------- ----- ------------------
  52 weeks ended January 29, 2004                           $ 33,142          $ (  718)    (1)        $ 32,424
  52 weeks ended January 30, 2003                             34,104            (1,520)    (2)          32,584
------------------------------------------------------ ------------------ --------------- ----- ------------------
  Year to year change                                           (962)                                     (160)
  52 weeks ended January 30, 2003                             34,104                                    32,584
------------------------------------------------------ ------------------ --------------- ----- ------------------
  Identical store sales percentage change                       (2.8)%                                    (0.5)%
====================================================== ================== =============== ===== ==================

====================================================== ================== =============== ===== ==================
                                                            Actual            Labor                Adjusted
                                                          Comparable         Dispute              Comparable
                                                         Store Sales       Adjustment             Store Sales
------------------------------------------------------ ------------------ --------------- ----- ------------------
  52 weeks ended January 29, 2004                           $ 33,705          $ (  727)    (3)        $ 32,978
  52 weeks ended January 30, 2003                             34,547            (1,534)    (4)          33,013
------------------------------------------------------ ------------------ --------------- ----- ------------------
  Year to year change                                           (842)                                     ( 35)
  52 weeks ended January 30, 2003                             34,547                                    33,013
------------------------------------------------------ ------------------ --------------- ----- ------------------
  Comparable store sales percentage change                      (2.4)%                                    (0.1)%
====================================================== ================== =============== ===== ==================

(1) Represents the identical Southern California Division food store sales in 2003 during the last 110 days of the fiscal year ended January 29, 2004.
(2) Represents the identical Southern California Division food store sales in 2002 during the last 110 days of the fiscal year ended January 30, 2003.
(3) Represents the comparable Southern California Division food store sales in 2003 during the last 110 days of the fiscal year ended January 29, 2004.
(4) Represents the comparable Southern California Division food store sales in 2002 during the last 110 days of the fiscal year ended January 30, 2003.

During 2003 the Company opened 50 combination food and drug stores, 27 stand-alone drugstores, two conventional and warehouse stores and 29 fuel centers. The Company closed or sold 15 combination food and drug stores, 18 conventional stores and 28 stand-alone drugstores. The Company also remodeled 192 stores. Net retail square footage of continuing operations was 94.0 million square feet at the end of 2003 as compared to 92.1 million square feet in 2002.

Sales decreased in 2002 as compared to 2001 due to the Company's restructuring activities initiated in July 2001. In 2001 the Company announced closure of 165 stores in addition to selling 80 New England Osco drugstores. These 245 stores' sales are included in 2001 and 2002 operating results until their actual closure or disposition. Sales in 2002 were also impacted by declining consumer confidence, as measured by The Conference Board Index, of 78.8 in January 2003 as compared to 97.8 in January 2002 and escalating competitive activity. Identical and comparable store sales decreased 0.9% and 0.4%, respectively, in 2002 as compared to 2001. Management estimates that overall deflation in products the Company sells was 0.1% and 0.3% in the twelve months ended January 30, 2003 and January 31, 2002, respectively.

During 2002 the Company opened 59 combination food and drug stores, 31 stand-alone drugstores, two conventional and warehouse stores and 46 fuel centers. The Company closed or sold 140 combination food and drug stores, 32 conventional and warehouse stores, 54 stand-alone drugstores and 50 fuel centers. The Company also remodeled 207 stores. Net retail square footage at continuing operations was 92.1 million square feet at the end of 2002 as compared to 92.8 million square feet at the end of 2001.

Gross profit, as a percent to sales, decreased in 2003 as compared to 2002 due to decreased sales leverage as a result of the Labor Dispute and continued, planned investments in pricing and promotion in key markets and categories to drive sales growth and market share. These investments were partially offset by savings generated from strategic sourcing initiatives, increased pharmacy gross margins as a result of a new supply contract and higher generic substitution and increased private label sales growth.

Gross profit, as a percent to sales, increased in 2002 as compared to 2001 as a result of improved Company-wide procurement practices, increased pharmacy margins due to higher generic substitutions and the Company's restructuring activities in 2002 and 2001, which included the sale or closure of 245 underperforming stores.

18

Selling, general and administrative (SG&A) expenses as a percent to sales increased in 2003 as compared to 2002. This increase was attributable to the lack of sales leverage due to the Labor Dispute as well as higher depreciation costs associated with the Company's continued investment in information technology and store development; increased compensation costs; increased workers compensation costs, primarily due to actual costs of prior years' claims exceeding prior years' estimated costs; increased employee benefit costs, primarily due to increases in Company and union sponsored health and welfare plans and increased pension charges, partially offset by a $36 gain associated with the curtailment of postretirement medical benefits for employees retiring after June 1, 2004; and contingent lease charges. The increased employee benefit costs experienced during the year were due, in part, to increases in mandatory contributions to multi-employer health care and pension plans to which the Company contributes. Contribution amounts are established under the Company's collective bargaining agreements, which are up for renewal at varying times over the next several years. If the health care and pension plan provisions of certain of these collective bargaining agreements cannot be renegotiated in a manner that reduces the prospective health care and pension costs of the Company as the Company intends, the Company's selling, general and administrative expenses could continue to increase, possibly significantly, in the future.

The increase in SG&A expenses as a percent to sales in 2002 as compared to 2001 was primarily due to the reduction in the Company's sales base as a result of the 2001 restructuring activities, an increase in employee benefit costs due to mandatory contributions to multi-employer health and welfare plans and rising workers' compensation costs. These increases were partially offset by the elimination of goodwill amortization in 2002 due to the adoption of SFAS No. 142 and a reduction in labor costs.

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

Interest expense, net, during 2003 totaled $409 as compared with $396 in the prior year. This increase was attributable to less interest being capitalized on construction projects during 2003. The decrease in capitalized interest was due to an overall reduction in the capital expenditures, particularly for new stores. Interest expense, net, was $425 in 2001. The decrease in 2002 from 2001 was due to lower average debt balances outstanding from year to year.

Earnings from continuing operations were $556 in 2003 compared to earnings from continuing operations of $865 for 2002. This decrease was due to lost sales and earnings associated with the Labor Dispute, decreased gross margin associated with planned investments in pricing and promotion and an increase in depreciation, compensation costs, workers' compensation costs and employee benefits costs. Earnings from continuing operations were $496 in 2001. The increase in income from continuing operations in 2002 as compared to 2001 was primarily attributable to the restructuring charges taken in 2001 related to the sale and closure of 165 underperforming retail stores, reduction of administrative and corporate overhead and consolidation and elimination of four division offices.

The Company's effective income tax rate from continuing operations for 2003 was 38.6%, as compared to 38.4% for 2002 and 42.6% for 2001. The decrease in 2002 as compared to 2001 was the result of the elimination of goodwill amortization.

Net earnings were $556 or $1.51 per diluted share for 2003, compared to net earnings of $485 or $1.22 per diluted share for 2002. The improvement in 2003 was a result of a charge of $379 in 2002 related to a strategic decision to exit underperforming markets and a charge of $94 in 2002 related to the adoption of a new accounting principle for the recognition of vendor funds, partially offset by the reduction in earnings from continuing operations in 2003 as a result of the Labor Dispute. Net earnings were $501 or $1.23 per diluted share for 2001.

Restructuring and Discontinued Operations The financial statement presentation includes the results of two significant restructuring initiatives that were implemented in 2001 and 2002. In July 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 6 "Restructuring" in the notes to the accompanying consolidated financial statements). In March 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 and two distribution centers and reduction of division offices from 15 to 11 (refer to Note 5 "Discontinued Operations/Market Exits" in the notes to the accompanying consolidated financial statements). Although the initiatives were similar, the adoption of SFAS No. 144 "Accounting for the

19

Impairment or Disposal of Long-Lived Assets" on February 1, 2002 resulted in 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 2002 and 2001 financial statements classify the results of operations for the 95 stores and two distribution centers divested in the 2002 initiative as discontinued operations. The operating results of the 165 stores divested in the 2001 initiative and the restructuring charges associated with the decision to sell or close those stores are included in continuing operations of the Company's financial statements for the periods prior to their sale or closure.

Phase 1: 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 then 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 respectively, 80 and 82 stores were closed or sold and 995 and 297 managerial and administrative employees were terminated under this restructuring plan. 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 would be held and used; one store's operating performance improved due to local market conditions, so it would also 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) to be completed by 2006. All remaining stores in this restructuring plan were sold or closed by 2003.

20

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

                                                       NONCASH                                TOTAL CHARGES
                                                       CHARGES               ACCRUALS             (CREDITS)
                                            -------------------    -------------------    ------------------
2001 Activity
   Asset impairments                                     $ 361               $       -             $     361
   Lease settlements                                         -                      57                    57
   Severance and outplacement                                -                      44                    44
   Other                                                     -                       6                     6
                                                                                          ------------------
      Restructuring 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                                                                        $    (37)
                                                                                          ==================
   Cash payments during 2002                                                       (16)
                                                                   -------------------
      Reserve balance at January 30, 2003                                           28

2003 Activity
   Gains on asset sales                                     (8)                      -                  $ (8)
   Other                                                    (2)                      -                    (2)
                                                                                          ------------------
      Restructuring credits                                                                        $     (10)
                                                                                          ==================
   Cash payments during 2003                                                        (9)
                                                                   -------------------
      Reserve balance at January 29, 2004                                    $      19
                                                                   ===================

The reserve balances of $19 at January 29, 2004 and $28 at January 30, 2003 are included in other current liabilities in the Company's Consolidated Balance Sheets. The related assets are recorded at their estimated fair value, less selling costs, of $13 as of January 29, 2004 and reported as assets held for sale in the Company's Consolidated Balance Sheets.

Phase 2: Discontinued Operations/Market Exits In March 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 the reduction of division offices from 15 to 11. The facilities identified for sale or closure were evaluated for lease liability and 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. The prior years' operating activities for these 95 stores, two distribution centers and reduction of division offices from 15 to 11 have been reported as Discontinued operations: Operating (loss) income in the accompanying Consolidated Earnings.

The discontinued operations generated sales of $290 and $1,326 in 2002 and 2001, respectively, and an operating loss of $50 and operating profit of $10 in 2002 and 2001, respectively. The discontinued operations were not material to the 2003 Consolidated Earnings. The loss from discontinued operations was $286 in 2002 and consisted of a loss from operations of $50 and asset impairments, lease settlements and other costs of $379, net of $143 in income tax benefits. The table below details the activity associated with the disposition.

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                                                       NONCASH               ACCRUALS         TOTAL CHARGES
                                                       CHARGES                                    (CREDITS)
                                            -------------------    -------------------    ------------------
2002 Activity
   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

2003 Activity
   Unfavorable lease settlements                                                     1                     1
                                                                                          -------------------
     Loss on disposal                                                                                 $    1
                                                                                          ===================
   Cash payments during 2003                                                        (4)
                                                                   --------------------
     Reserve balance at January 29, 2004                                     $       8
                                                                   ====================

The reserve balances of $8 at January 29, 2004 and $11 at January 30, 2003 are included in other current liabilities in the Company's Consolidated Balance Sheets.

Assets related to discontinued operations are recorded at their estimated net realizable value, less selling costs, of $8 as of January 29, 2004 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 80 of the 95 stores and both distribution centers as of January 29, 2004.

2003 unfavorable lease settlement charges are included in continuing operations as part of selling, general and administrative expenses.

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

Liquidity and Capital Resources
Cash provided by operating activities during 2003 was $1,545, compared to $2,060 in 2002 and $2,009 in 2001. The decrease in cash provided by operating activities in 2003 as compared to 2002 was primarily due to lower earnings before interest, taxes, depreciation and amortization from continuing operations, a reduction in accounts payable due to lower inventory purchases and inventory turns in the Southern California Division directly related to the Labor Dispute and increased inventory levels as a result of increased store count. These uses of cash were partially offset by a reduction in the Company's current income tax payable as a result of implementation of tax planning initiatives in 2003. In 2002, cash flows from operations increased slightly primarily as the result of better inventory leverage in 2002 as compared to 2001. With the resolution of the Labor Dispute, management expects operating cash flows in 2004 to increase slowly as affected stores rebuild market share in southern California.

Cash flow used in investing activities for 2003 increased to $926 compared to $662 in 2002. This increase was a result of 2002 investing activities that included proceeds from the sale of assets (primarily associated with the 2001 restructuring activities and the 2002 market exits) that were $488 greater than asset sale proceeds received in 2003, partially offset by lower capital expenditures in 2003. Capital expenditures declined $265 in 2003 as compared to 2002, primarily due to amounts invested in new store and store remodels in 2003 being partially offset by increased expenditures on information technology. The Company expects capital expenditures in 2004 to be approximately $300 higher than those in 2003 due to the proposed acquisition of Shaw's and expects other investing related activities to remain level.

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Cash flows used in investing activities in 2002 decreased $418 as compared to 2001 primarily due to cash received from the sale of assets associated with the 2001 restructuring and 2002 market exits. Capital expenditures decreased $96 due to reduced spending on new store construction and store acquisitions partially offset by increased spending on existing store upgrades and remodeling.

The Company's financing activities for 2003, 2002 and 2001 included payments on long-term borrowings, stock purchased and retired and dividend payments. Cash flow used in financing activities in 2003 was $492 as compared to $1,297 and $905 in 2002 and 2001, respectively. The primary difference in financing activity cash flows was the Company's decision to purchase fewer shares of its common stock in 2003. In 2002, the Company purchased $862 of its common stock as compared to $108 in 2003.

The Board of Directors, at its March 2004 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 29, 2004 or January 30, 2003. The Company expects to use commercial paper to fund a portion of the purchase price for Shaw's.

The Company had three revolving credit facilities totaling $1,400 during 2003. The first agreement, a 364-day revolving credit facility with total availability of $100 was due to expire in February 2004 but renewed for an additional year to expire in February 2005. The second agreement, a revolving credit facility with total availability of $350 was set to expire in March 2004, but was extended through July 2004. The Company expects to replace this agreement. The third agreement, a five-year facility for $950, expires in March 2005. 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 29, 2004 and January 30, 2003, the Company was in compliance with these requirements. However, due to goodwill that is expected to be generated as a result of the acquisition of Shaw's, the Company will have to obtain a prospective waiver of the consolidated tangible net worth covenant under these agreements. All of the revolving 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, as long as the Company is in compliance with the terms and conditions of the related agreements. No borrowings were outstanding under the credit facilities as of January 29, 2004 or January 30, 2003.

Albertsons filed a shelf registration statement with the Securities and Exchange Commission, 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 and 2003, no securities were issued under the 2001 Registration Statement. As of January 29, 2004, $2,400 of debt securities remain available for issuance under the 2001 Registration Statement; however, there can be no assurance that the Company will be able to issue debt securities under this registration statement at terms acceptable to the Company.

During 2002, the Company purchased and retired 35.1 million shares of its common stock for $862, at an average price of $24.54 per share. During 2003, the Company repurchased 5.3 million shares of its common stock for a total expenditure of $108 at an average price of $20.26 per share. On December 5, 2003, the Board of Directors reauthorized a program authorizing management, at their discretion, to purchase and retire up to $500 of the Company's common stock through December 31, 2004. 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 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. The Company intends to use a combination of cash-on-hand and commercial paper to finance the acquisition of Shaw's.

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As of January 29, 2004, the Company's credit ratings were as follows:

                                        S & P             Moody's           Fitch
----------------------------------- ----------------- ----------------- -----------------
    Long-term debt                      BBB               Baa2              BBB
    Short-term debt                     A2                P2                F2

The Company does not have any credit rating downgrade triggers that would accelerate repayment in the Company's fixed-term debt portfolio were a downgrade in the Company's credit ratings to occur. 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 would increase the cost of borrowings under the Company's credit facilities. In addition, a downgrade could limit the Company's ability to issue commercial paper. Should this occur, the Company might seek alternative sources of funding, including the issuance of notes under the existing shelf registration statements. In addition, up to $1,400 could be drawn upon from the Company's senior unsecured credit facilities. The Company does not anticipate the acquisition of Shaw's to have an impact on its credit ratings.

Contractual Obligations, Commercial Commitments and Guarantees

Contractual Obligations
The Company enters into a variety of legally binding obligations and commitments in the normal course of its business. The table below presents the Company's long-term contractual obligations and commitments which are considered to represent known future cash payments that the Company will be required to make under existing contractual arrangements. Some amounts are based on management's estimates and assumptions and amounts actually paid may vary from those reflected in the table.

                Contractual Obligation                                 Payments Due By Period
-------------------------------------------------------- ---------------------------------------------------
                                                                                                   2009 and
                                                  Total         2004   2005 - 2006  2007 - 2008  Thereafter
--------------------------------------- ---------------- ----------- -------------- ------------ -----------
Long-term debt, including current
portion (1)                                     $ 4,958       $  506        $  208       $   74     $ 4,170
Capital lease obligations (2)                       865           53            96           93         623
Operating leases (2)                              3,765          349           628          531       2,257
Purchase obligations (4)
   Utilities (3)                                    148           68            80            -           -
   Contracts for purchase of property
   and construction of buildings                     99           98             1            -           -
  Transportation contracts                           80           80             -            -           -
Other
   Self insurance liability                         731          262           237          105         127
   Compensation and benefits                        530           56            91           28         355
   Other long-term liabilities                       13            8             5            -           -
--------------------------------------- ---------------- ------------ ------------- ------------ -----------
Total contractual cash obligations              $11,189       $1,480        $1,346       $  831     $ 7,532
======================================= ================ ============ ============= ============ ===========

(1) The Company has medium-term notes and debentures that contain put options that would require the Company to repay borrowed amounts prior to maturity. Medium-term notes of $30 and $50 mature in July 2027 and April 2028, respectively, and have put options exercisable in July 2007 and April 2008, respectively. Debentures in the amount of $200 mature in May 2037 and have a put option exercisable in May 2009. For the purpose of the table above, payments of these obligations are assumed to occur at maturity.
(2) 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.
(3) The Company has entered into supply contracts to purchase specified quantities of electricity and natural gas that have terms through 2006. The amounts included in the table reflect projected purchases based on historical usage and contracted rates.
(4) In addition to the contracts noted in this table, the Company enters into supply contracts to purchase products for resale in the ordinary course of business. This category of contracts covers a broad spectrum of products and sometimes includes specific merchandising obligations relative to those products. These supply contracts typically include either a volume commitment or a fixed expiration date; pricing terms based on the vendor's published list price; termination provisions; and other standard contractual considerations. There are a significant number of these contracts, however they are typically cancelable upon return of unearned allowances and therefore no amounts have been included above.

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Commercial Commitments
The Company had outstanding Letters of Credit of $103 as of January 29, 2004, all of which were issued under separate agreements with multiple financial institutions. These agreements are not associated with the Company's credit facilities. Of the $103 outstanding at year end, $83 were standby letters of credit covering primarily workers' compensation or performance obligations. The remaining $20 were commercial letters of credit supporting the Company's merchandise import program. The Company paid issuance fees that varied, depending on type, up to 0.90% of the outstanding balance of the letter of credit.

Guarantees
The Company provides guarantees, indemnifications and assurances to others in the ordinary course of its business. The Company has evaluated its agreements that contain guarantees and indemnification clauses in accordance with the guidance of FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others".

The Company is contingently liable for certain operating leases that were assigned to third parties in connection with various store closures and dispositions. If any of these third parties were to fail to perform their obligations under the lease, the Company could be responsible for the lease obligations. In 2003, the Company was notified that certain of these third parties have become insolvent and are seeking bankruptcy protection. At January 29, 2004, approximately 26 store leases for which the Company is contingently liable were subject to the bankruptcy proceedings of such third parties and 22 of such had been rejected by the applicable third party. The Company recorded pre-tax charges of $20 in 2003, which represents the remaining minimum lease payments and other payment obligations under the 22 rejected leases, less estimated sublease income and discounted at the Company's credit-adjusted risk-free interest rate. As of January 29, 2004, the Company had remaining guarantees on approximately 192 stores with leases extending through 2026. Assuming that each respective purchaser became insolvent, an event the Company believes to be remote because of the wide dispersion among third parties and remedies available, the minimum future undiscounted payments, exclusive of any potential sublease income, are $273.

In connection with the merger between the Company and American Stores Company, the Company was made party to and guaranteed a $200 American Stores Company bank term note due July 2004; this obligation is reflected in the Company's Consolidated Balance Sheet as of January 29, 2004.

The Company enters into a wide range of indemnification arrangements in the ordinary course of business. These include tort indemnifications, tax indemnifications, indemnifications against third party claims arising out of arrangements to provide services to Albertsons and indemnifications in merger and acquisition agreements. It is difficult to quantify the maximum potential liability under these indemnifications; however at January 29, 2004 the Company was not aware of any material liabilities arising from these indemnifications.

Off Balance Sheet Arrangements
At January 29, 2004, the Company had no significant investments that were accounted for under the equity method in accordance with accounting principles generally accepted in the United States. Investments that were accounted for under the equity method at January 29, 2004, had no liabilities associated with them that were guaranteed by or that would be considered material to Albertsons. Accordingly, the Company does not have any off balance sheet arrangements with unconsolidated entities.

Capital Expenditures
The Company is committed to keeping its stores up to date. In the last three years, the Company has opened or remodeled 693 stores, representing 32% of the Company's retail square footage as of January 29, 2004. The following summary of historical capital expenditures includes capital leases, stores acquired in business and asset acquisitions and assets acquired with related debt:

                                                                        2003         2002        2001
---------------------------------------------------------------- ------------ ------------ -----------
New and acquired stores                                             $    371      $   688     $   875
Remodels                                                                 345          455         348
Retail replacement equipment, technology and other                       387          221         247
Distribution facilities and equipment                                     53           70          64
---------------------------------------------------------------- ------------ ------------ -----------
Total capital expenditures                                          $  1,156      $ 1,434     $ 1,534
================================================================ ============ ============ ===========

Total capital expenditures include capitalized lease obligations incurred of $62 in 2003, $75 in 2002 and $79 in 2001.

25

The Company's 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 2004 is approximately $1,300 and includes approximately $100 in new capital and operating lease obligations. The Company expects capital expenditures to be approximately $300 higher if the proposed acquisition of Shaw's is consummated.

Related Party Transactions
Transactions with related parties were not considered material. See Note 20 "Related Party Transactions" in the Notes to Consolidated Financial Statements.

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 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 credits for purchasing products in advance of their need. The terms of vendor funds arrangements vary in length, from short-term arrangements that are completed within a quarter, to long-term arrangements that are expected to be completed within ten years.

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), which the Company adopted as of the beginning of 2002. As a result of this guidance, the Company began recognizing the vendor funds for merchandising activities as a reduction of cost of sales when the related products are sold as opposed to the previous method of recognizing these credits as a reduction to cost of sales when the merchandising activity was performed in accordance with the underlying agreements. Vendor funds that have been earned as a result of completing the required performance under the terms of the underlying agreements but for which the product has not yet been sold are recognized as reductions of inventory. The amount of vendor funds remaining in ending inventory requires management judgment and estimates. Management estimates these amounts based on 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. The amount of vendor funds reducing the Company's inventory ("inventory offset") as of January 29, 2004 was $155, an increase of $3 from the beginning of 2003. The vendor funds inventory offset as of January 30, 2003 was $152, a decrease of $6 from the beginning of 2002.

26

LONG-LIVED ASSET IMPAIRMENTS The Company regularly reviews long-lived assets for indicators of impairment. Management's judgments regarding the existence of impairment indicators are based on operational performance. Future events could cause management to conclude that impairment indicators exist and that the value of long-lived assets is impaired. When events or changes in circumstances indicate that the carrying value of an asset or an asset group is not recoverable, the fair value of the asset is compared to its carrying value. Impairment losses are measured as the amount by which the carrying value of the asset exceeds its estimated fair value. The estimated fair value of the assets is determined by internal real estate specialists or by independent quotes. These estimates can be significantly impacted by changes in real estate market conditions, the economic environment and inflation.

For properties that have closed and are under long-term operating lease agreements, the present value of any remaining liability under the lease, discounted using credit risk-free rates and net of estimated sublease rentals that could be reasonably obtained for the property, is recognized as a liability and charged to operations. The value of any equipment and leasehold improvements related to a closed store is reduced to reflect net recoverable values. Internal real estate specialists estimate the subtenant income 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 the Company's 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.

GOODWILL The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," in 2002. Upon adoption, 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 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 and 2003, the Company completed its annual impairment review and determined that there was no impairment. The fair value estimates could change in the future depending on internal and external factors, including the success of strategic sourcing initiatives, labor cost controls and competitive activity.

SELF-INSURANCE The Company is primarily self-insured for property loss, workers' compensation, automobile liability costs 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 development of previous claims, future economic conditions, court decisions and legislative actions. For example, workers compensation costs were $361, $282 and $224 in 2003, 2002 and 2001 respectively. The increase in costs was primarily attributable to development of prior year claims that were higher than previously estimated while the annual number of workers' compensation claims has decreased year to year.

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 workers' compensation. The changes in a state's political and economic environment increase the variability in the unpaid claim liabilities. The Company's workers' compensation reserves do not contemplate any of these potential developments.

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. Weaker market performance may significantly increase pension expense and cash contributions in the future. 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

27

are accumulated and amortized over future periods and, therefore, generally affect the Company's recognized expense and recorded obligation in such future periods. For example, in 2003 the Company's discount rate assumption was 6.15% and its long-term asset return assumption was 8.0%. Using these assumptions, the Company's 2003 pension expense was $30, following expense of $12 in 2002 and income of $9 in 2001. If the Company had decreased its estimated discount rate to 5.9% and its expected return on plan assets to 7.5%, the Company's 2003 pension expense would have been $37 and net earnings would have decreased approximately $4. If the Company had increased its discount rate assumption to 6.4% and its expected return on plan assets to 8.5%, 2003 pension expense would have been $24 and net earnings would have increased approximately $4.

Recently Issued and Adopted Accounting Standards In July 2001 the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"). This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 became effective for the Company on January 31, 2003 and did not have a material effect on the Company's consolidated financial statements.

In November 2002 the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). 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. The adoption of FIN 45 did not have a material effect on the Company's consolidated financial statements.

In January 2003 the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51" ("FIN 46"). 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 was 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 were required to be applied for the first interim or annual period beginning after June 15, 2003. In December 2003 the FASB issued Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51" ("FIN 46(R)"). FIN 46(R) provides additional guidance related to identifying variable interest entities and determining whether such entities should be consolidated. The adoption of FIN 46(R) did not have a material effect on the Company's consolidated financial statements.

In May 2003 the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" ("SFAS No. 150"). SFAS No. 150 requires that certain financial instruments, which under previous guidance could be accounted for as equity, be classified as liabilities in statements of financial position. SFAS No. 150 was effective for financial instruments entered into or modified after May 31, 2003 and was effective for the Company in the third quarter. The adoption of SFAS No. 150 did not have a material effect on the Company's consolidated financial statements.

In November 2003 the EITF confirmed as a consensus EITF Issue No. 03-10, "Application of EITF Issue No. 02-16, `Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor,' by Resellers to Sales Incentives Offered to Consumers by Manufacturers" ("EITF 03-10"). EITF 03-10 will not impact the Company's existing accounting and reporting policies for manufacturers' coupons that can be presented at any retailer that accepts coupons. For arrangements with vendors that are entered into or modified after January 29, 2004, the Company is required to record the vendor reimbursement as a reduction of cost of sales (instead of sales) if the coupon can only be redeemed at a Company retail store. This modification to the Company's accounting and reporting policies will only impact sales and cost of sales beginning in the Company's first quarter of 2004 and is not expected to have a material impact on sales or cost of sales.

In December 2003 the FASB issued SFAS No. 132 (Revised 2003), "Employers' Disclosure about Pensions and Other Postretirement Benefits - An Amendment of FASB Statements No. 87, 88 and 106" ("SFAS No. 132(R)"). This statement increases the existing disclosure requirements by requiring more details about pension plan assets, benefit obligations, cash flows, benefit costs and related information. The disclosures required by SFAS No. 132(R) are included in Note 18 "Employee Benefit Plans".

28

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 and monitoring of contamination at existing and previously owned sites. Although the ultimate outcome and expense of environmental remediation is uncertain, the Company believes that the 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. Environmental remediation costs were not material in 2003, 2002 or 2001.

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. 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. 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.

As of January 29, 2004 and 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 whose fair values 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:

                                                                         There-                    Fair
                        2004     2005      2006     2007       2008       After       Total       Value
--------------------- -------- -------- --------- -------- ---------- ----------- ----------- -----------
Fixed rate debt        $ 506    $ 206     $   2    $  12     $   62     $ 4,170     $ 4,958     $ 5,491
  Obligations
Weighted average
  interest rate          6.7%     7.3%      8.5%     6.9%       6.6%        7.6%        7.4%          -

29

Item 8. Financial Statements and Supplementary Data.

Albertson's, Inc.
Index to Consolidated Financial Statements

                                                                                               Page
                                                                                               Number
Independent Auditors' Report                                                                     31
Consolidated Earnings for the fiscal years ended January 29, 2004, January 30, 2003 and
   January 31, 2002                                                                              32
Consolidated Balance Sheets at January 29, 2004 and January 30, 2003                             33
Consolidated Cash Flows for the fiscal years ended January 29, 2004, January 30, 2003 and
   January 31, 2002                                                                              34
Consolidated Stockholders' Equity for the fiscal years ended January 29, 2004, January 30,
   2003  and January 31, 2002                                                                    35
Notes to Consolidated Financial Statements                                                       36

30

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 29, 2004 and January 30, 2003 and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended January 29, 2004. 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 29, 2004 and January 30, 2003 and the results of their operations and their cash flows for each of the three years in the period ended January 29, 2004, 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 2 and 12) and for closed stores (Note 5) 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 2 and 3) to conform to Emerging Issues Task Force Issue No. 02-16.

As discussed in Note 25 to the consolidated financial statements, on March 25, 2004, the Company entered into a stock purchase agreement with J Sainsbury plc and JS USA Holdings Inc. to acquire all of the outstanding capital stock of the entities which conduct J Sainsbury plc's U.S. retail grocery business.

Deloitte & Touche LLP
Boise, Idaho
March 25, 2004

31

ALBERTSON'S, INC.
CONSOLIDATED EARNINGS

For the 52 weeks ended                                            January 29,     January 30,        January 31,
(In millions, except per share data)                                     2004            2003               2002
------------------------------------------------------------- ----------------- --------------- ------------------
Sales                                                                $ 35,436        $ 35,626           $ 36,605
Cost of sales                                                          25,306          25,248             26,179
------------------------------------------------------------- ----------------- --------------- ------------------
Gross profit                                                           10,130          10,378             10,426
Selling, general and administrative expenses                            8,822           8,598              8,731
Restructuring (credits) charges                                           (10)            (37)               468
Gain on sale of New England Osco drugstores                                 -               -                (54)
Merger-related credits                                                      -               -                (15)
------------------------------------------------------------- ----------------- --------------- ------------------
Operating profit                                                        1,318           1,817              1,296
Other expenses:
  Interest, net                                                          (409)           (396)              (425)
  Other, net                                                               (3)            (16)                (8)
------------------------------------------------------------- ----------------- --------------- ------------------
Earnings from continuing operations before income taxes                   906           1,405                863
Income tax expense                                                        350             540                367
------------------------------------------------------------- ----------------- --------------- ------------------
Earnings from continuing operations                                       556             865                496
Discontinued operations:
  Operating (loss) income                                                   -             (50)                10
  Loss on disposal                                                          -            (379)                 -
  Income tax (benefit) expense                                              -            (143)                 5
------------------------------------------------------------- ----------------- --------------- ------------------
(Loss) earnings from discontinued operations                                -            (286)                 5
------------------------------------------------------------- ----------------- --------------- ------------------
Earnings  before  cumulative  effect of change in accounting              556             579                501
  principle
Cumulative effect of change in accounting  principle (net of
  tax of $60)                                                               -             (94)                 -
------------------------------------------------------------- ----------------- --------------- ------------------
Net Earnings                                                         $    556        $    485           $    501
============================================================= ================= =============== ==================

Earnings (loss) per share:
Basic
  Continuing operations                                              $   1.51        $   2.18           $   1.22
  Discontinued operations                                                   -           (0.72)              0.01
  Cumulative  effect of change in accounting  principle (net
   of tax of $0.15)                                                         -           (0.24)                 -
------------------------------------------------------------- ----------------- --------------- ------------------
  Net Earnings                                                       $   1.51        $   1.22           $   1.23
============================================================= ================= =============== ==================

Diluted
  Continuing operations                                              $   1.51        $   2.17           $   1.22
  Discontinued operations                                                   -           (0.72)              0.01
  Cumulative  effect of change in accounting  principle (net
   of tax of $0.15)                                                         -           (0.23)                 -
------------------------------------------------------------- ----------------- --------------- ------------------
  Net Earnings                                                       $   1.51        $   1.22           $   1.23
============================================================= ================= =============== ==================

Weighted average common shares outstanding:
  Basic                                                                   368             397                406
  Diluted                                                                 368             399                408

See Notes to Consolidated Financial Statements

32

ALBERTSON'S, INC.
CONSOLIDATED BALANCE SHEETS

                                                                                  January 29,        January 30,
(In millions, except par value data)                                                     2004               2003
-------------------------------------------------------------------------- ------------------- ------------------
ASSETS
Current Assets:
  Cash and cash equivalents                                                          $    289           $    162
  Accounts and notes receivable, net                                                      683                647
  Inventories                                                                           3,035              2,973
  Assets held for sale                                                                     69                120
  Prepaid and other                                                                       343                366
-------------------------------------------------------------------------- ------------------- ------------------
    Total Current Assets                                                                4,419              4,268
Land, buildings and equipment, net                                                      9,145              9,029
Goodwill                                                                                1,400              1,399
Intangibles, net                                                                          130                214
Other assets                                                                              300                301
-------------------------------------------------------------------------- ------------------- ------------------
Total Assets                                                                         $ 15,394           $ 15,211
========================================================================== =================== ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                                                                   $  1,774           $  1,993
  Salaries and related liabilities                                                        659                615
  Self-insurance                                                                          262                244
  Current maturities of long-term debt and capital lease obligations                      520                119
  Other current liabilities                                                               470                477
-------------------------------------------------------------------------- ------------------- ------------------
    Total Current Liabilities                                                           3,685              3,448
Long-term debt                                                                          4,452              4,950
Capital lease obligations                                                                 352                307
Self-insurance                                                                            469                367
Other long-term liabilities and deferred credits                                        1,055                942
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 -
    368 shares and 372 shares, respectively                                               368                372
  Capital in excess of par                                                                155                128
  Accumulated other comprehensive loss                                                   (109)               (96)
  Retained earnings                                                                     4,967              4,793
-------------------------------------------------------------------------- ------------------- ------------------
    Total Stockholders' Equity                                                          5,381              5,197
-------------------------------------------------------------------------- ------------------- ------------------
Total Liabilities and Stockholders' Equity                                           $ 15,394           $ 15,211
========================================================================== =================== ==================

See Notes to Consolidated Financial Statements

33

ALBERTSON'S, INC.
CONSOLIDATED CASH FLOWS
For the 52 weeks ended                                          January 29,        January 30,        January 31,
(In millions)                                                          2004               2003               2002
----------------------------------------------------------- ----------------- ------------------ ------------------
Cash Flows From Operating Activities:
  Net earnings                                                        $ 556              $ 485              $ 501
  Adjustments to reconcile net earnings to net cash
  provided by operating activities:
    Depreciation and amortization                                       969                943                913
    Net deferred income taxes                                           172                100               (129)
    Other noncash charges                                                48                 21                 42
    Stock-based compensation                                             25                 19                 19
    Goodwill amortization                                                 -                  -                 56
    Gain on curtailment of postretirement benefits                      (36)                 -                (36)
    Net gain on asset sales                                             (24)                (9)               (54)
    Restructuring (credits) charges                                      (8)               (16)               424
    Discontinued operations noncash charges                                                365                 54
    Cumulative effect of change in accounting principle                   -                 94                  -
  Changes in operating assets and liabilities:
      Receivables and prepaid expenses                                  (38)                21               (110)
      Inventories                                                       (62)               112                 40
      Accounts payable                                                 (242)              (100)               (68)
      Other current liabilities                                          29                (88)               287
      Self-insurance                                                    120                106                 71
      Unearned income                                                    25                 32                  3
      Other long-term liabilities                                       (11)               (25)                (4)
----------------------------------------------------------- ----------------- ------------------ ------------------
Net cash provided by operating activities                             1,545              2,060              2,009
----------------------------------------------------------- ----------------- ------------------ ------------------

Cash Flows From Investing Activities:
  Capital expenditures                                               (1,094)            (1,359)            (1,455)
  Proceeds from disposal of land, buildings and
   equipment                                                             72                101                288
  Proceeds from disposal of assets held for sale                        119                578                118
  Other                                                                 (23)                18                (31)
----------------------------------------------------------- ----------------- ------------------ ------------------
Net cash used in investing activities                                  (926)              (662)            (1,080)
----------------------------------------------------------- ----------------- ------------------ ------------------

Cash Flows From Financing Activities:
  Cash dividends paid                                                  (279)              (306)              (309)
  Payments on long-term borrowings                                     (120)              (143)               (89)
  Stock purchases and retirements                                      (108)              (862)                 -
  Proceeds from long-term borrowings                                      9                  -                623
----------------------------------------------------------- ----------------- ------------------ ------------------
  Proceeds from stock options exercised                                   6                 14                 23
  Net commercial paper activity and bank borrowings                       -                  -             (1,153)
----------------------------------------------------------- ----------------- ------------------ ------------------
Net cash used in financing activities                                  (492)            (1,297)              (905)
----------------------------------------------------------- ----------------- ------------------ ------------------
Net Increase in Cash and Cash Equivalents                               127                101                 24
Cash and Cash Equivalents at Beginning of Year                          162                 61                 37
----------------------------------------------------------- ----------------- ------------------ ------------------
Cash and Cash Equivalents at End of Year                              $ 289              $ 162              $  61
=========================================================== ================= ================== ==================

Supplemental Cash Flow Information:
  Cash payments for income taxes, net of refunds                      $ 231              $ 376              $ 403
  Cash payments for interest, net of amounts capitalized                401                390                299
  Noncash investing and financing activities:
     Capitalized lease obligations incurred                              62                 75                 79

See Notes to Consolidated Financial Statements

34

ALBERTSON'S, INC.
CONSOLIDATED STOCKHOLDERS' EQUITY

                                   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
-----------------------------------------------------------------------------------------------------------------
 Balance at February 1, 2001        $405       $ 48            $    -    $ 5,241          $ 5694            $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
                                                                                                            ====
 Net earnings                          -          -                 -        556             556             556
 Exercise of stock options,
   including tax benefits              -          6                 -          -               6               -
 Stock purchases and
   retirements - 5,314,700                                                 (103)           (108)
   shares                             (5)         -                 -                                          -
 Deferred stock unit plan              1         20                 -          -              21               -
 Directors' stock plan                 -          1                 -          -               1               -
 Dividends                             -          -                 -       (279)           (279)              -
 Minimum pension liability
   adjustment (net of tax of                                      (13)                       (13)            (13)
   $8)                                 -          -                            -
-----------------------------------------------------------------------------------------------------------------
 Balance at January 29, 2004        $368       $155            $ (109)   $ 4,967          $5,381            $543
=================================================================================================================

See Notes to Consolidated Financial Statements

35

ALBERTSON'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data)

1. 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. Based on sales, the Company is one of the largest retail food and drug chains in the world.

As of January 29, 2004 the Company operated 2,305 stores in 31 states. Retail operations are supported by 17 major Company distribution operations, strategically located in the Company's operating markets. The Company also operated 228 fuel centers near existing stores.

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.

2. 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 2003, 2002 and 2001 each contained 52 weeks and ended on January 29, 2004, January 30, 2003 and January 31, 2002, respectively.

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 are located within the United States.

Derivatives: From time to time, the Company enters into certain derivative transactions, however 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 accumulated other comprehensive income and recognized as an adjustment to interest expense over the life of the related debt instrument.

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 credits for purchasing products in advance of their need. The terms of vendor funds arrangements vary in length, from short-term arrangements that are completed within a quarter, to long-term arrangements that are expected to be completed within ten years.

36

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"), which the Company adopted as of the beginning of 2002. As a result of this adoption, the Company began recognizing vendor funds for merchandising activities as a reduction of cost of sales when the related products are sold as opposed to the previous method of recognizing these credits as a reduction 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 amount of vendor funds reducing the Company's inventory ("inventory offset") as of January 29, 2004 was $155, an increase of $3 from the beginning of 2003. The vendor funds inventory offset as of January 30, 2003 was $152, a decrease of $6 from 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 2003) 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 and 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 amortized on the straight-line method over the lease 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 the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", which required goodwill to no longer be 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 value. Prior to 2002, goodwill was amortized using the straight-line method over its estimated benefit period of 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 expenses in the Company's Consolidated Earnings.

Impairment of Long Lived Assets and Closed Store Reserves: The Company assesses long-lived assets for indicators of impairment based on operational performance. When events or changes in circumstances indicate that the carrying value of an asset or an asset group may not be recoverable, the asset's fair value is compared to its carrying value. Impairment losses are recognized as the amount by which the carrying amounts of the assets exceed their fair values. Asset fair values are determined by internal real estate specialists or by independent quotes. These estimates can be significantly impacted by changes in real estate market conditions, the economic environment and inflation.

For properties that are closed and are under long-term lease agreements, the present value of any remaining liability under the lease, discounted using credit risk-free rates and net of expected sublease recovery, is recognized as a liability and expensed. The value of any equipment and leasehold improvements related to a closed store is reduced to reflect net recoverable values. Internal real estate 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 the Company's 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.

37

Self-Insurance: The Company is primarily self-insured for property loss, workers' compensation, automobile liability costs 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.

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. The only income recognized from any in-store rental arrangement is the lease amount received based on space occupied.

Procurement, Distribution and Merchandising Costs: Cost of sales include, among other things, purchasing, inbound freight costs, product quality testing costs, warehousing costs, internal transfer costs, advertising, private label program and strategic sourcing program costs. Selling, general and administrative expenses include, among other things, merchandising planning and management costs, store-based purchasing and receiving costs and inventory management costs.

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 are expensed when incurred. In 2003 and 2002, cooperative advertising funds were accounted for as vendor funds as described above. In 2001, cooperative advertising funds from vendors were recorded in the period which the related expense was incurred. Gross advertising expenses of $472, $527 and $537, excluding cooperative advertising money received from vendors, were included with cost of sales in the Company's Consolidated Earnings for 2003, 2002 and 2001, respectively.

Stock-Based Compensation: The Company accounts 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. SFAS No. 123, "Accounting for Stock-Based Compensation" as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB Statement No. 123", encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair 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:

                                                                 2003         2002        2001
------------------------------------------------------- -------------- ------------ -----------
Net Earnings as reported                                       $  556       $  485      $  501
Add:  Stock-based compensation expense included in
  reported net earnings, net of related tax effects                16           12          11
Deduct: Total stock-based compensation expense
  determined under fair value based method for all
  awards, net of  related tax effects                             (45)         (44)        (41)
--------------------------------------------------------- ------------ ------------ -----------
Pro Forma Net Earnings                                         $  527       $  453      $  471
========================================================= ============ ============ ===========

Basic Earnings Per Share:
  As Reported                                                  $ 1.51       $ 1.22      $ 1.23
  Pro Forma                                                      1.43         1.14        1.16
========================================================= ============ ============ ===========

Diluted Earnings Per Share:
  As Reported                                                  $ 1.51       $ 1.22      $ 1.23
  Pro Forma                                                      1.43         1.14        1.15
========================================================= ============ ============ ===========

The 2003, 2002 and 2001 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. For more information on the method and assumptions used in determining the fair value of stock-based compensation, see Note 16.

38

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. A valuation allowance is recorded for deferred tax assets considered not likely to be realized. The major temporary differences and their net effect are shown in Note 15 "Income Taxes".

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 the minimum pension liability of $21 ($13 net of tax), $126 ($77 net of tax) and $39 ($23 net of tax) for 2003, 2002 and 2001, respectively.

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

3. Cumulative Effect of Change in Accounting Principle As discussed in Note 2 "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 and 2001.

                                                                              2002           2001
--------------------------------------------------------------------- ------------- --------------
Net earnings                                                                 $ 579          $ 497

   Earnings per share - basic                                                $1.46          $1.22
   Earnings per share - diluted                                              $1.45          $1.22

4. New and Recently Adopted Accounting Standards In July 2001 the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"). This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 became effective for the Company on January 31, 2003 and did not have a material effect on the Company's consolidated financial statements.

In November 2002 the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). 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. The adoption of FIN 45 did not have a material effect on the Company's consolidated financial statements.

In January 2003 the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51" ("FIN 46"). 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 was 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 were required to be applied for the first interim or annual period beginning after June 15, 2003. In December 2003 the FASB issued Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51" ("FIN 46(R)"). FIN 46(R) provides additional guidance related to identifying variable interest entities and determining whether such entities should be consolidated. The adoption of FIN 46(R) did not have a material effect on the Company's consolidated financial statements.

In May 2003 the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" ("SFAS No. 150"). SFAS No. 150 requires that certain financial instruments, which under previous guidance could be accounted for as equity, be classified as liabilities in statements of financial position. SFAS No. 150 was effective for financial instruments entered into or modified after May 31, 2003, and was effective for the Company in the third quarter. The adoption of SFAS No. 150 did not have a material effect on the Company's consolidated financial statements.

39

In November 2003 the EITF confirmed as a consensus EITF Issue No. 03-10, "Application of EITF Issue No. 02-16, `Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor,' by Resellers to Sales Incentives Offered to Consumers by Manufacturers" ("EITF 03-10"). EITF 03-10 will not impact the Company's existing accounting and reporting policies for manufacturers' coupons that can be presented at any retailer that accepts coupons. For arrangements with vendors that are entered into or modified after January 29, 2004, the Company is required to record the vendor reimbursement as a reduction of cost of sales (instead of sales) if the coupon can only be redeemed at a Company retail store. This modification to the Company's accounting and reporting policies will only impact sales and cost of sales beginning in the Company's first quarter of 2004 and is not expected to have a material impact on sales or cost of sales.

In December 2003 the FASB issued SFAS No. 132 (Revised 2003), "Employers' Disclosure about Pensions and Other Postretirement Benefits - An Amendment of FASB Statements No. 87, 88 and 106" ("SFAS No. 132(R)"). This statement increases the existing disclosure requirements by requiring more details about pension plan assets, benefit obligations, cash flows, benefit costs and related information. The disclosures required by SFAS No. 132(R) are included in Note 17 "Employee Benefit Plans".

5. Discontinued Operations/Market Exits In March 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 the reduction of division offices from 15 to 11. The facilities identified for sale or closure were evaluated for lease liability and asset impairment, including goodwill, in accordance with the Company's policy. The 2001 and 2002 operating activities for these 95 stores, two distribution centers and the related division offices have been classified in Discontinued operations: Operating (loss) income in the accompanying Consolidated Earnings.

The discontinued operations generated sales of $290 and $1,326 in 2002 and 2001, respectively, and an operating loss of $50 and operating profit of $10 in 2002 and 2001, respectively. The discontinued operations were not material to the 2003 Consolidated Earnings. The loss from discontinued operations was $286 in 2002 and consisted of a loss from operations of $50 and asset impairments, lease settlements and other costs of $379, net of $143 in income tax benefits. The table below details the activity associated with the disposition:

                                                      NONCASH                               TOTAL  CHARGES
                                                      CHARGES               ACCRUALS              (CREDITS)
                                            -------------------    -------------------    ------------------
2002 Activity
   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

2003 Activity
   Unfavorable lease settlements                                                   1                     1
                                                                                          ------------------
    Loss on disposal                                                                               $     1
                                                                   -------------------    ==================
   Cash payments during 2003                                                      (4)
                                                                   -------------------
    Reserve balance at January 29, 2004                                      $     8
                                                                   ===================

The reserve balance of $8 at January 29, 2004 and $11 at January 30, 2003 are included in other current liabilities in the Company's Consolidated Balance Sheet.

40

Assets related to discontinued operations are recorded at their estimated net realizable value, less selling costs, of $8 as of January 29, 2004 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. The Company had either sold or terminated the leases related to 80 of the 95 stores and both distribution centers as of January 29, 2004.

2003 unfavorable lease settlement charges are included in continuing operations as part of selling, general and administrative expenses.

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

6. 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 then 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, respectively, 80 and 82 stores were closed or sold and 995 and 297 managerial and administrative employees were terminated. In 2002, management revised the planned restructuring activities to retain the Company's store fixture manufacturing operation, as it was determined to be more cost-effective than purchasing like-fixtures from external sources in the future; to retain one store due to improved operating performance; and to halt one part of the transaction processing consolidation due to a decision to replace the Company's human resource information systems (HRIS) by 2006. All remaining stores in this restructuring plan were sold or closed by 2003.

41

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

                                                      NONCASH               ACCRUALS        TOTAL  CHARGES
                                                      CHARGES                                     (CREDITS)
                                            -------------------    -------------------    ------------------
 2001 Activity
   Asset impairments                                    $ 361                $     -               $   361
   Lease settlements                                        -                     57                    57
   Severance and outplacement                               -                     44                    44
   Other                                                    -                      6                     6
                                                                                          ------------------
      Restructuring 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                                                                        $   (37)
                                                                                          ==================
   Cash payments during 2002                                                     (16)
                                                                   -------------------
      Reserve balance at January 30, 2003                                         28

2003 Activity
   Gains on asset sales                                    (8)                     -                  $ (8)
   Other                                                   (2)                     -                    (2)
                                                                                          ------------------
      Restructuring credits                                                                        $   (10)
                                                                                          ==================
    Cash payments during 2003                                                     (9)
                                                                   -------------------
      Reserve balance at January 29, 2004                                    $    19
                                                                   ===================

The reserve balances of $19 at January 29, 2004 and $28 at January 30, 2003 are included in other current liabilities in the Company's Consolidated Balance Sheets. The related assets are recorded at their estimated fair value, less selling costs, of $13 as of January 29, 2004, and reported as assets held for sale in the Company's Consolidated Balance Sheet.

42

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

                                                        NONCASH               ACCRUALS                 TOTAL
                                                                                                     CHARGES
                                                        CHARGES                                     (CREDITS)
                                               ------------------    -------------------    ------------------
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 charge                                                                              $   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 charge                                                                              $   35
                                                                                            ==================
   Cash payments during 2002                                                       (16)
                                                                     -------------------
     Reserve balance at January 30, 2003                                            30

2003 Activity
   Asset impairments                                         27                      -                $   27
   Lease terminations                                         -                      5                     5
   Favorable lease termination                                -                     (6)                   (6)
   Gains on disposition                                     (13)                     -                   (13)
                                                                                            ------------------
     Closed store charge                                                                              $   13
                                                                                            ==================
   Cash payments during 2003                                                        (9)
                                                                     -------------------
     Reserve balance at January 29, 2004                                        $   20
                                                                     ===================

As of January 29, 2004, $6 of the reserve balance was included with accounts payable and the remaining $14 was included with other long-term liabilities and deferred credits in the Company's Consolidated Balance Sheet. The related assets are recorded at their estimated fair value of $43 as of January 29, 2004, less selling costs, and reported as assets held for sale in the Company's Consolidated Balance Sheet.

During fiscal 2001, the restructuring plan (discussed in Note 6 "Restructuring") included actions to accelerate the disposal of surplus property that included terminating leases through negotiated buyouts and selling owned properties through auctions. As a result of these actions, the Company incurred $51 of pre-tax restructuring adjustments. These charges were included in selling, general and administrative expenses in the Company's 2001 Consolidated Earnings.

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.

8. Merger-related Credits 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.

43

9. Accounts and Notes Receivable Accounts and notes receivable, net, consisted of the following:

                                                                          January 29,        January 30,
                                                                                 2004               2003
-------------------------------------------------------------------- ----------------- ------------------
Trade and other accounts receivable                                            $  693             $  664
Current portion of notes receivable                                                 8                  6
Allowance for doubtful accounts                                                   (18)               (23)
-------------------------------------------------------------------- ----------------- ------------------
                                                                               $  683             $  647
==================================================================== ================= ==================

10. Inventories Approximately 96% 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 $576 and $589 higher at the end of 2003 and 2002, respectively. Net earnings (basic and diluted earnings per share) would have been lower by $8 ($0.02) in 2003, lower by $2 ($0.01) in 2002 and higher by $3 ($0.01) in 2001. The replacement cost of inventories valued at LIFO approximates FIFO cost.

During 2003 and 2002, inventory quantities in certain LIFO layers 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 2003 and 2002 purchases. As a result, cost of sales decreased by $3 in 2003, $4 in 2002 and $10 in 2001. This increased net earnings (basic and diluted earnings per share) by $2 ($0.01) in 2003, by $2 ($0.01) in 2002 and by $6 ($0.01) in 2001.

11. Land, Buildings and Equipment Land, buildings and equipment, net, consisted of the following:

                                                                    January 29,           January 30,
                                                                           2004                  2003
---------------------------------------------------------- --------------------- ---------------------
Land                                                                     $1,936                $1,939
Buildings                                                                 5,978                 5,713
Fixtures and equipment                                                    5,928                 5,561
Leasehold improvements                                                    1,728                 1,619
Capitalized leases                                                          420                   355
---------------------------------------------------------- --------------------- ---------------------
                                                                         15,990                15,187
Accumulated depreciation                                                 (6,735)               (6,060)
Accumulated amortization on capital leases                                 (110)                  (98)
---------------------------------------------------------- --------------------- ---------------------
                                                                         $9,145                $9,029
========================================================== ===================== =====================

Depreciation expense was $931, $901 and $869 for 2003, 2002 and 2001. Amortization expense of capital leases was $18, $18 and $19 for 2003, 2002 and 2001, respectively.

12. Goodwill and Other Intangible Assets The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," in 2002. As a result, the Company did not incur any expense for the amortization of goodwill in 2003 or 2002. The pretax expense for the amortization of goodwill included in continuing operations was $56 in 2001. Upon adoption, 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 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 and 2003, the Company completed its annual impairment review and determined that there was no impairment. The fair value estimates could change in the future depending on internal and external factors, including the success of strategic sourcing initiatives, labor cost controls and competitive activity.

44

The following table presents the Company's 2001 net earnings and earnings per share as if SFAS No. 142 had been adopted as of the beginning of fiscal year 2001:

                                                        January 29, 2004   January 30, 2003   January 31, 2002
                                                        ----------------- ------------------ ------------------
 Net earnings, as reported                                         $ 556              $ 485              $ 501
  Add back goodwill amortization, net of tax                           -                  -                 56
                                                        ----------------- ------------------ ------------------
Adjusted net earnings                                              $ 556              $ 485              $ 557
                                                        ================= ================== ==================
Basic EPS                                                          $1.51              $1.22              $1.23
  Add back goodwill amortization, net of tax                          -                   -               0.14
                                                        ----------------- ------------------ ------------------
  Adjusted Basic EPS                                               $1.51              $1.22              $1.37
                                                        ================= ================== ==================
Diluted EPS                                                        $1.51              $1.22              $1.23
  Add back goodwill amortization, net of tax                           -                  -               0.14
                                                        ----------------- ------------------ ------------------
  Adjusted Diluted EPS                                             $1.51              $1.22              $1.37
                                                        ================= ================== ==================

In 2003 there was no material change in the net carrying amount of goodwill. In connection with the complete exit of certain markets discussed in Note 5, the Company wrote off $68 of goodwill, net in 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:

                                                           January 29, 2004    January 30, 2003
                                                        -------------------- -------------------
Amortizing:
   Favorable acquired operating leases                               $  221              $  231
   Customer lists and other contracts                                    56                  53
                                                        -------------------- -------------------
                                                                        277                 284
Accumulated amortization                                               (186)               (173)
                                                        -------------------- -------------------
                                                                         91                 111
Non-Amortizing:
   Liquor licenses                                                       39                  39
   Pension related intangible assets                                      -                  64
                                                        -------------------- -------------------
                                                                         39                 103
                                                        -------------------- -------------------
                                                                     $  130              $  214
                                                        ==================== ===================

Straight line amortization expense for intangibles was $20, $24 and $25 in 2003, 2002 and 2001, respectively. Amortizing intangible assets have remaining useful lives from 2 to 38 years. Projected amortization expense for existing intangible assets is: $19, $12, $7, $6 and $5, for 2004, 2005, 2006, 2007 and 2008, respectively.

45

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

                                                                                 January 29,    January 30,
                                                                                        2004           2003
----------------------------------------------------------------------------- --------------- --------------
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 2008 through 2028, average interest rate of 6.9%                  145            245
Notes  due  July  3,  2004,   average  interest  rate  of  6.95%  and  6.7%,
respectively                                                                             200            200
Industrial   revenue  bonds,   average  interest  rate  of  5.9%  and  5.9%,
   respectively due October 1, 2004 through December 15, 2011                              5              8
Secured  mortgage notes and other notes payable,  average  interest rates of
   6.9%  and 9.1%, respectively due 2004 through 2019                                     24             18
----------------------------------------------------------------------------- --------------- --------------
                                                                                       4,958          5,055
Current maturities                                                                      (506)          (105)
----------------------------------------------------------------------------- --------------- --------------
                                                                                      $4,452         $4,950
============================================================================= =============== ==============

The Company had three revolving credit facilities totaling $1,400 during 2003. The first agreement, a 364-day revolving credit facility with total availability of $100 was due to expire in February 2004 but renewed for an additional year to expire in February 2005. The second agreement, a revolving credit facility with total availability of $350 was set to expire in March 2004, but was extended through July 2004. The Company expects to replace this agreement. The third agreement, a five-year facility for $950, expires in March 2005. 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 29, 2004 and January 30, 2003, the Company was in compliance with these requirements. However, due to goodwill that is expected to be generated as a result of the acquisition of the operations of J Sainsbury plc to be acquired by the Company (Shaw's) (see Note
25 "Subsequent Events" for further discussion of the anticipated acquisition of Shaw's) the Company will have to obtain a prospective waiver of the consolidated tangible net worth covenant under these agreements. All of the revolving 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, as long as the Company is in compliance with the terms and conditions of the related agreements. No borrowings were outstanding under the credit facilities as of January 29, 2004 or January 30, 2003.

The Company filed a shelf registration statement with the Securities and Exchange Commission, 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.

46

The Company has pledged real estate with a cost of $36 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 2004 to 2014.

Medium-term notes of $30 due July 2027 contain a put option that 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 contains a put option that would 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:

                                                                   2003         2002          2001
----------------------------------------------------------- ------------ ------------ -------------
Long-term debt                                                   $  374       $  377        $  401
Capitalized leases                                                   36           35            30
Capitalized interest                                                (16)         (27)          (23)
----------------------------------------------------------- ------------ ------------ -------------
Interest expense                                                    394          385           408
Bank service charges, net of interest income                         15           11            17
----------------------------------------------------------- ------------ ------------ -------------
                                                                 $  409       $  396        $  425
=========================================================== ============ ============ =============

The scheduled aggregate maturities of long-term debt outstanding at January 31, 2004, are summarized as follows: $506 in 2004, $206 in 2005, $2 in 2006, $12 in 2007, $62 in 2008 and $4,170 thereafter. These figures do not include the potential accelerations due to put options.

14. Capital Stock On December 2, 1996, the Board of Directors adopted a stockholder rights plan, which was amended on August 2, 1998, March 16, 1999 and September 26, 2003 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 per one one-thousandth share. Subject to certain exceptions, the rights will become exercisable for shares of preferred stock upon the earlier of (1) 10 days following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of common stock and (2) 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 (collectively, the persons or groups referenced in (1) and (2) are referred to as an "Acquiring Person").

Under the plan, subject to certain exceptions, if any person becomes an Acquiring Person, each right will then entitle its holder as defined by the plan, other than such Acquiring Person, upon payment of the $160 per one one-thousandth share 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 2002, the Company purchased and retired 35.1 million shares of the Company's common stock for $862, at an average price of $24.54 per share. During 2003, the Company purchased and retired 5.3 million shares for $108, at an average price of $20.26 per share. On December 5, 2003, the Board of Directors reauthorized a program authorizing management, at their discretion, to purchase and retire up to $500 of the Company's common stock through December 31, 2004. 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.

47

15. Income Taxes Deferred tax assets and liabilities consist of the following:

                                                                          January 29,      January 30,
                                                                                 2004             2003
----------------------------------------------------------------------- --------------- ----------------
Deferred tax assets:
  Compensation and benefits                                                     $ 301            $ 317
  Self-insurance                                                                  149              216
  Basis in fixed assets                                                           157              184
  Unearned income                                                                  33               17
  Other, net                                                                       65               69
  Valuation allowance                                                              (3)
                                                                                                    -
----------------------------------------------------------------------- --------------- ----------------
Total deferred tax assets                                                         702              803
----------------------------------------------------------------------- --------------- ----------------
Deferred tax liabilities:
  Basis in fixed assets and capitalized leases                                   (602)            (537)
  Inventories                                                                     (83)             (82)
  Compensation and benefits                                                       (23)             (51)
  Self-insurance                                                                  (14)              -
  Other, net                                                                      (37)             (25)
----------------------------------------------------------------------- --------------- ----------------
Total deferred tax liabilities                                                   (759)            (695)
----------------------------------------------------------------------- --------------- ----------------
Net deferred tax (liabilities) assets                                           $ (57)           $ 108
======================================================================= =============== ================

The change in net deferred tax assets includes total adjustments of $7 for the year ended January 29, 2004 related to stock units of $(1) and other comprehensive income of $8.

The Company has federal and state net operating loss carryforwards of $1 and $159, respectively, which will expire in years 2005 through 2021.

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. These accrued amounts are classified in other long term liabilities based on expected settlement dates.

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

                                                                        2003         2002        2001
---------------------------------------------------------------- ------------ ------------ -----------
Current:
   Federal                                                             $ 159        $ 448       $ 454
   State                                                                  19           52          50
---------------------------------------------------------------- ------------ ------------ -----------
                                                                         178          500         504
Deferred:
   Federal                                                               154           36        (124)
   State                                                                  18            4         (13)
---------------------------------------------------------------- ------------ ------------ -----------
                                                                         172           40        (137)
---------------------------------------------------------------- ------------ ------------ -----------
                                                                       $ 350        $ 540       $ 367
================================================================ ============ ============ ===========

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

                                          2003       Percent      2002       Percent        2001       Percent
----------------------------------- ----------- ------------- ---------- ------------- ---------- -------------
Taxes computed at statutory rate         $ 317          35.0     $ 492          35.0      $ 302           35.0
State income taxes net of federal
  income tax benefit                        36           4.0        56           4.0         37            4.2
Goodwill amortization                        -             -         -             -         27            3.1
Other                                       (3)         (0.4)       (8)         (0.6)         1            0.3
----------------------------------- ----------- ------------- ---------- ------------- ---------- -------------
                                         $ 350          38.6     $ 540          38.4      $ 367           42.6
=================================== =========== ============= ========== ============= ========== =============

48

16. Stock Options and Stock Awards At January 29, 2004, 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 (Albertson's, Inc. 1995 Amended and Restated Stock-Based Incentive Plan) (the "1995 Plan"). Under the 1995 Plan, approved by the stockholders most recently in 2001, options to purchase the Company's common stock and stock awards may be granted to officers, key employees, special advisors (as defined in the 1995 Plan) and non-employee members of the Board of Directors. During 2001, the 1995 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 1,672,398 units were made during 2003 to key officers and non-employee directors of the Company, of which 1,046,548 and 356,885 units will vest at a rate of 33% per year after the first two years and 20% per year for the first five years, respectively, and be distributed in a manner elected by the participant on a date after the participant ceases to be an officer of the Company, 253,500 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 15,465 units were fully vested at their grant date.

Grants of 1,080,441 units were made during 2002 to key officers and non-employee directors of the Company, of which 432,841 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, 638,540 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.

Compensation expense for deferred stock units of $25, $19 and $19 was recorded in selling, general and administrative expenses in 2003, 2002 and 2001, 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):

                                       January 29, 2004        January 30, 2003        January 31, 2002
                                  ----------------------- ----------------------- -----------------------
                                     Shares        Price     Shares        Price     Shares        Price
--------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Outstanding at beginning of year     30,245      $ 31.41     28,045      $ 33.06     25,290      $ 32.79
Granted                               7,169        20.35      5,312        23.06      6,406        32.64
Exercised                              (295)       21.72       (722)       23.99     (1,303)       22.71
Forfeited                            (1,955)       32.14     (2,390)       34.43     (2,348)       34.70
--------------------------------- ----------- ----------- ----------- ----------- ----------- -----------

Outstanding at end of year           35,164      $ 29.20     30,245      $ 31.41     28,045      $ 33.06
================================= =========== =========== =========== =========== =========== ===========
Options exercisable at end of
year                                 16,626      $ 34.08     13,523      $ 35.04     11,414      $ 35.67
================================= =========== =========== =========== =========== =========== ===========

As of January 29, 2004, 9 million shares of the Company's common stock were reserved for future grants of stock options and stock awards.

49

The following table summarizes options outstanding and options exercisable as of January 29, 2004 and the related weighted average remaining contractual life (years) and weighted average exercise price (shares in thousands):

                                       Options Outstanding                  Options Exercisable
                              ---------------------------------------    ---------------------------
                                      Shares     Remaining   Average              Shares    Average
Option Price Per Share           Outstanding          Life     Price         Exercisable      Price
----------------------------- --------------- ------------- ---------    ---------------- ----------
$ 20.23  - $ 22.52                    17,062           8.3   $ 21.18               3,970    $ 21.72
  23.52  -   34.87                    12,160           6.7     31.55               7,282      31.26
  35.00  -   45.94                     1,971           2.9     39.86               1,961      39.87
  47.00  -   51.19                     3,971           5.4     51.14               3,413      51.13
----------------------------- --------------- ------------- ---------    ---------------- ----------
$ 20.23  - $ 51.19                    35,164           7.1   $ 29.20              16,626    $ 34.08
============================= =============== ============= =========    ================ ==========

The weighted average fair value at date of grant for Albertsons options granted during 2003, 2002 and 2001 was $6.44, $6.80 and $10.16 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:

                                                                 2003             2002          2001
------------------------------------------------------- --------------- ---------------- -------------
Expected life (years)                                             5.7              5.7           5.8
Risk-free interest rate                                          3.56%            3.15%         3.62%
Volatility                                                       39.4%            38.0%         34.8%
Dividend yield                                                   3.74%            3.38%         2.33%

17. Employee Benefit Plans and Collective Bargaining Agreements 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 Albertsons Salaried Employees Pension Plan and Albertsons Employees Corporate Pension Plan are funded, qualified, defined benefit, noncontributory plans for eligible Albertsons 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. In 1999, in conjunction with the authorization of ASRE (described later), the Company-sponsored defined benefit plans were amended to close the plans to future new entrants, with the exception of certain union employees based on current contracts. 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's funding policy for the defined benefit plans is to contribute the minimum contribution allowed under the Employee Retirement Income Security Act ("ERISA"), with consideration given to contributing larger amounts in order to be exempt from Pension Benefit Guaranty Corporation ("PBGC") variable rate premiums and/or participant notices of under-funding. The Company will recognize contributions in accordance with applicable regulations, with consideration given to recognition for the earliest plan year permitted.

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 that supplement those provided by the Company's other retirement plans.

The Company offers health and life insurance to retirees under multiple programs. The terms of these plans vary based on employment history and date of retirement. For certain pre-1991 retirees, the Company provides coverage at little or no cost to the retirees. For other current retirees, the Company provides a fixed dollar contribution and retirees pay contributions to fund the remaining cost. On December 5, 2003, the Board of Directors approved a curtailment of retirement medical benefits for all non-retired employees. For retirees after June 1, 2004 the fixed dollar employer contribution will be reduced to $0 and retiree contributions will fund the entire benefit. The impact of the curtailment for 2003 was a gain of $36, recorded in selling, general and administrative expenses in Consolidated Earnings.

The Company uses its fiscal year-end date as the measurement date for its Company-sponsored defined benefit pension plans and postretirement benefit plans.

50

The following table sets forth the obligations and funded status of the Company-sponsored defined benefit pension plans and postretirement health and life insurance benefit plans:

                                                Pension Benefits                    Other Benefits
                                         January 29,        January 30,      January 29,       January 30,
                                                2004              2003              2004              2003
---------------------------------------- ------------- -- -------------- -- -------------- -- --------------
Change in benefit obligation:
   Benefit obligation at beginning of          $ 656             $ 567             $  69             $  71
    year
   Service cost                                   13                12                 2                 3
   Interest cost                                  40                37                 4                 4
   Curtailment gain                                -                 -               (36)               (6)
   Plan participants' contributions                -                 -                12                12
   Actuarial loss (gain)                          42                59                (6)               (1)
   Benefits paid                                 (18)              (19)              (16)              (14)
---------------------------------------- ------------- -- -------------- -- -------------- -- --------------
End of year benefit obligation                   733               656                29                69
---------------------------------------- ------------- -- -------------- -- -------------- -- --------------
Change in plan assets:
   Fair value of plan assets at
    beginning of year                            398               466                 -                 -
   Actual return on plan assets                  104               (51)                -                 -
   Employer contributions                         21                 2                 4                 2
   Plan participants' contributions                -                 -                12                12
   Benefits paid                                 (18)              (19)              (16)              (14)
---------------------------------------- ------------- -- -------------- -- -------------- -- --------------
Fair  value  of plan  assets  at end of          505               398                 -                 -
year
---------------------------------------- ------------- -- -------------- -- -------------- -- --------------
Funded status                                   (228)             (258)              (29)              (69)
Unrecognized net actuarial loss (gain)           252               304               (18)              (13)
Unrecognized prior service benefit               (51)              (64)                -                 -
---------------------------------------- ------------- -- -------------- -- -------------- -- --------------
Net amount recognized                          $ (27)            $ (18)            $ (47)            $ (82)
======================================== ============= == ============== == ============== == ==============

Amounts recognized in the statement of financial position consist of:

                                       Pension Benefits                      Other Benefits
                                 January 29,            January      January 29,        January 30,
                                        2004         30,  2003              2004               2003
                                --------------     -------------    --------------     --------------
Accrued benefit liability              $(212)            $(246)            $ (47)             $ (82)
Intangible assets                          -                64                 -                  -
Accumulated
other

  comprehensive income,
  net of taxes                           112                99                 -                  -
Deferred income taxes                     73                65                 -                  -
                                --------------     -------------    --------------     --------------
Net amount recognized                  $ (27)            $ (18)            $ (47)             $ (82)
                                ==============     =============    ==============     ==============

The accumulated benefit obligation for all defined benefit pension plans was $717 and $644 at January 29, 2004 and January 30, 2003.

At January 29, 2004, the accumulated benefit obligation exceeded the fair value of the plans' assets in the Albertsons Employees Corporate Pension Plan, Albertsons 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 unrecognized prior service cost is a component of other comprehensive income and is reflected in stockholders' equity, net of related tax benefit.

51

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:

                                                                         January 29,       January 30,
                                                                                2004              2003
------------------------------------------------------------------- ----------------- -----------------
Projected benefit obligation:
   Albertsons Employees Corporate Pension Plan                                  $432              $383
   Albertsons Salaried Employees Pension Plan                                    280               253
   Executive Pension Makeup Plan                                                  21                20
Accumulated benefit obligation:
   Albertsons Employees Corporate Pension Plan                                   429               381
   Albertsons Salaried Employees Pension Plan                                    267               243
   Executive Pension Makeup Plan                                                  21                20
Plan assets (fair market value):
   Albertsons Employees Corporate Pension Plan                                   279               216
   Albertsons Salaried Employees Pension Plan                                    226               181

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

                                                                    2003            2002          2001
-------------------------------------------------------- ----------------- ---------------- -------------
Service cost - benefits earned during the period                     $13             $12           $11
Interest cost on projected benefit obligations                        40              37            35
Expected return on assets                                            (32)            (39)          (48)
Amortization of prior service cost                                    (6)             (7)           (7)
Recognized net actuarial loss                                         22               9             -
Curtailment gain                                                      (7)              -             -
-------------------------------------------------------- ----------------- ---------------- -------------
Net periodic benefit expense (income)                                $30             $12           $(9)
======================================================== ================= ================ =============

The net periodic postretirement benefit cost was as follows:

                                                                    2003            2002          2001
---------------------------------------------------------- -------------- ----------------- -----------
Service cost                                                          $2              $3            $3
Interest cost                                                          4               4             4
Amortization of unrecognized gain                                     (1)             (1)           (1)
---------------------------------------------------------- -------------- ----------------- -----------
Net periodic postretirement benefit cost                              $5              $6            $6
========================================================== ============== ================= ===========

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. Weighted-average assumptions used for the Company-sponsored defined benefit pension plans were as follows:

                                                    2003             2002              2001
------------------------------------------ -------------- -- ------------- -- --------------
 Weighted-average assumptions used to
 determine benefit obligations:
   Discount rate                                    5.80%            6.15%             6.75%
   Rate of compensation increase               3.45-4.50%       3.40-4.50%        3.70-4.50%

Weighted-average assumptions used to
determine net periodic benefit cost:
   Discount rate                                    6.15%            6.75%             7.15%
   Rate of compensation increase               3.45-4.50%       3.40-4.50%        3.70-4.50%
   Expected long-term return on plan                8.00%            8.50%             9.50%
   assets

The discount rate used to determine the Company-sponsored postretirement health and life insurance benefits plans was 3.55%, 6.10% and 6.75% as of the end of 2003, 2002 and 2001, respectively. As a result of a plan curtailment in fiscal year 2003, there are no expected employer paid benefit payments for any employees who retire after June 1, 2004. Therefore, the duration of the expected employer paid benefit payments was reduced. Discount rates are based on the expected timing and amounts of the expected employer paid benefits.

52

Expected long-term return on plan assets is estimated by asset class and is generally based on historical returns, volatilities and risk premiums. Based upon the plan's asset allocation, composite return percentiles are developed upon which the plan's expected long-term return is based.

The expected employer benefit payments for certain pre-1991 retirees were measured using an annual medical trend in the age-specific per capita cost of covered health care benefits of 6% for years 2002 and later. Medical trend does not affect the expected employer benefit payments for other retirees.

With the exception of the plans covering ASC grandfathered retirees, all postretirement plans are contributory, with participants' contributions adjusted periodically. 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 Albertsons 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.

Assets of the two funded Company defined benefit pension plans are invested in directed trusts. Assets in the directed trusts are invested as follows:

                                                         January 29, 2004      January 30,
                                                                                      2003
-------------------------------------------------------- ----------------- ----------------
Company  common  stock ($0 and $39 at January  29, 2004                0%              10%
and January 30, 2003)
Domestic equity                                                       53%              39%
International equity                                                  18%              15%
Fixed income                                                          27%              34%
Cash equivalents                                                       2%               2%
-------------------------------------------------------- ----------------- ----------------
                                                                     100%             100%
======================================================== ================= ================

Investments in the pension trust are overseen by the Investment Management Subcommittee which is made up of officers of the Company and outside experts.

The overall investment strategy and policy has been developed based on the need to satisfy the long-term liabilities of the Company's pension plans. Risk management is accomplished through diversification across asset classes, multiple investment manager portfolios and both general and portfolio-specific investment guidelines. The asset allocation guidelines are as follows:

                       Minimum Exposure          Target           Maximum Exposure
                       ----------------          ------           ----------------
Domestic Equities
     Large                       40%               50%                    60%
     Small                        5                10                     15
Non-U.S. Equities                10                15                     20
Fixed Income                     20                25                     30

Managers are expected to generate a total return consistent with their philosophy offer protection in down markets and outperform both their respective peer group medians and an appropriate benchmark, net of expenses, over a three-to-five year period.

The investment guidelines contain the following:
-Categorical restrictions such as no commodities, no short sales, and no margin purchases;
-Portfolio restrictions that address such things as proxy voting, brokerage arrangements and restrictions on the purchase of Company Securities;
-Asset class restrictions that address such things as single security or sector concentration, capitalization limits and minimum quality standards; and
-A provision for specific exemptions from the above guidelines upon approval by the Investment Management Subcommittee.

Futures and options must be used for hedging purposes only and not for speculative purposes. Long futures positions may be used in place of cash market securities (e.g., treasury futures purchased in place of buying long treasury bonds).

53

The Company expects to contribute $65 to its pension plans in 2004. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the Company's defined benefit pension plans:

                                                         Pension Benefits
-------------------------------------------------------- -----------------
2004                                                                  $19
2005                                                                   22
2006                                                                   24
2007                                                                   27
2008                                                                   30
Years 2009-2013                                                       208

The Company also sponsors the Albertsons Savings and Retirement Estates ("ASRE") Plan (formerly the American Stores Retirement Estates Plan) which is a defined contribution retirement Plan. ASRE is a profit sharing plan with a salary deferral feature pursuant to Section 401(k) of the Internal Revenue Code. Most participants in ASRE are eligible to receive a profit sharing contribution (Company contribution based on employee compensation). In addition, the Company provides a matching contribution based on the amount of eligible compensation contributed by the associate. ASRE was originally authorized by the ASC Board of Directors for the purpose of providing retirement benefits for employees of ASC and its subsidiaries.

In addition to ASRE, the Company sponsors a tax-deferred savings plan that is also a salary deferral plan pursuant to Section 401(k) of the Internal Revenue Code. The plan covers employees represented by a labor union who meet age and service eligibility requirements and whose collective bargaining agreement provides for participation.

All Company contributions to ASRE 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.

The Company also contributes to various plans under industry wide collective bargaining agreements, primarily for defined benefit pension plans. Total contributions to these plans were $92 for 2003, $80 for 2002 and $49 for 2001. The Company also contributes to various plans under industry wide collective bargaining agreements which provide for health care benefits to both active employees and retirees. Total contributions to these plans were $416 for 2003, $408 for 2002 and $371 for 2001.

Retirement plans expense (income) was as follows:

                                                                     2003          2002         2001
------------------------------------------------------------- ------------ ------------- ------------
Defined benefit pension plans                                       $  30         $  12        $ ( 9)
ASRE defined contribution plan                                        143           153          150
Multi-employer plans                                                   92            80           49
------------------------------------------------------------- ------------ ------------- ------------
                                                                    $ 265         $ 245        $ 190
============================================================= ============ ============= ============

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.

Following is a summary of the obligation for postemployment benefits included in the Company's Consolidated Balance Sheets:

                                                                           January 29,       January 30,
                                                                                  2004              2003
-------------------------------------------------------------------- ------------------ -----------------
Included with salaries and related liabilities                                   $  37             $  25
Included with other long-term liabilities                                           63                67
-------------------------------------------------------------------- ------------------ -----------------
                                                                                 $ 100             $  92
==================================================================== ================== =================

On December 8, 2003 the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act") was signed into law. The Act introduces a prescription drug benefit under Medicare Part D as well as a federal subsidy to sponsors of retiree health benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In accordance with FASB Staff Position No. FAS 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003", the Company has deferred recognition of any effects the Act may have on Company-sponsored postemployment benefit plans and has not yet determined the impact, if any, on the Company. Specific authoritative guidance on the accounting for the federal subsidy is pending and that guidance, when issued, could result in a retroactive change in previously reported information.

54

Collective Bargaining Agreements: As of January 29, 2004, the Company employed approximately 212,000 people, which included approximately 198,000 regular workers and 14,000 replacement workers in stores directly impacted by the now resolved labor dispute in southern California. As of January 29, 2004, approximately 58% of the Company's employees were covered by collective bargaining agreements, primarily with the United Food and Commercial Workers and International Brotherhood of Teamsters. Labor agreements covering approximately 45,000 associates expire during 2004.

18. Employment Contracts and Change in Control Agreements The Company has entered into a ten-year employment agreement with its Chairman of the Board, Chief Executive Officer and President, which provides a minimum base salary, signing bonus, annual bonus payments, stock options and deferrable stock awards as well as other benefits (the "CEO Agreement"). The Company has also entered into agreements with certain other officers (the "Officers Agreements"). These 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 within the first two or three years of service for purposes of the Officers Agreements and during the ten-year term for purposes of the CEO Agreement, 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 prior to or 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 for the most senior executives and, for these 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 will receive the stated benefits upon an involuntary termination (other than for cause) or resignation 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.

19. 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.

55

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 29, 2004 and January 30, 2003:

                                                                     January 29,        January 30,
                                                                            2004               2003
-------------------------------------------------------------- ------------------ -------------------
Real estate and equipment                                                  $ 420              $ 355
Accumulated amortization                                                    (110)               (98)
-------------------------------------------------------------- ------------------ -------------------
                                                                           $ 310              $ 257
============================================================== ================== ===================

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 29, 2004, are as follows:

                                                           Operating                           Capital
                                                              Leases       Subleases            Leases
--------------------------------------------------- ----------------- --------------- ----------------
2004                                                         $   349        $    (41)           $   53
2005                                                             326             (41)               49
2006                                                             302             (38)               47
2007                                                             280             (35)               47
2008                                                             251             (22)               46
Thereafter                                                     2,257             (49)              623
--------------------------------------------------- ----------------- --------------- ----------------
Total minimum obligations (receivables)                      $ 3,765        $   (226)              865
=================================================== ================= ===============
Interest                                                                                          (499)
--------------------------------------------------- ----------------- --------------- -----------------
Present value of net minimum obligations                                                           366
Current portion                                                                                    (14)
--------------------------------------------------- ----------------- --------------- -----------------
Long-term obligations at January 29, 2004                                                       $  352
=================================================== ================= =============== =================

Rent expense under operating leases was as follows:

                                                                  2003              2002           2001
---------------------------------------------------- ------------------ ------------------ --------------
Minimum rent                                                     $ 396             $ 389          $ 375
Contingent rent                                                     18                26             28
---------------------------------------------------- ------------------ ------------------ --------------
                                                                   414               415            403
Sublease rent                                                      (94)              (92)           (94)
---------------------------------------------------- ------------------ ------------------ --------------
                                                                 $ 320             $ 323          $ 309
==================================================== ================== ================== ==============

20. Related Party Transactions In 2003, the Company leased one store and two office locations ($1 of rent, common area maintenance fees and taxes paid) from an entity that has a relationship with a member of the Board of Directors. In 2001 and 2002, the Company leased nine stores and two office locations and paid common area maintenance fees for eight other stores ($3 and $3 of rent, common area maintenance fees and taxes paid during 2002 and 2001, respectively) purchased a piece of land ($2 during 2001) and obtained consulting services (insignificant) from entities that have or, at the time had, a relationship with certain members of the Board of Directors.

21. 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:

                                                                     January 29,        January 30,
                                                                            2004               2003
---------------------------------------------------------------- ---------------- ------------------
Fair value                                                               $ 5,491            $ 5,675
Carrying amount                                                            4,958              5,055

56

22. 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 Albertsons as well as 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 Court of Appeal of the State of California Second Appellate District decision in Ralphs Grocery Co. vs. Superior Court, 112 Cal. App. 4th 1090 (2003) addressed certain of the issues advanced by the plaintiffs in this lawsuit. On February 18, 2004, the California Supreme Court declined to review this decision. Certain of the issues were decided by the appellate court favorably to the Company's position and certain were decided adverse to the Company's position. There remain numerous issues to be resolved by the trial court. The Company believes it has strong defenses on these issues and the Company is vigorously advancing its position. 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 of the Rocher class decertification issue 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 September 2000, an agreement was 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 Company mailed notices of the settlement and claims forms to approximately 70,500 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 claims administrator was able to assign a value to approximately 1,000 claims, which amount to a total of approximately $14, although the value of many of those claims is still subject to challenge by the Company. A second claim process was ordered by the court, but the parties are still waiting for final instructions from the Court. 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.

57

On November 20, 2003, three consumers filed an action in California state court (Kerner, et al. v. Albertsons, Inc.; Ralphs Grocery Company; and Safeway Inc., dba Vons, a Safeway Company, Los Angeles Superior Court, Case No. BC306456), claiming that certain provisions of the Labor Dispute Agreements violate California's Cartwright Act and the Unfair Competition Law. The lawsuit seeks unspecified monetary damages and injunctive relief. On February 2, 2004, the Attorney General for the State of California filed an action in Los Angeles federal court (California, ex rel Lockyer v. Safeway, Inc. dba Vons, a Safeway Company; Albertsons, Inc. and Ralphs Grocery Company, a division of The Kroger Co., United States District Court Central District of California, Case No. CV04-0687) claiming that certain provisions of the Labor Dispute Agreements violate section 1 of the Sherman Act. The lawsuit seeks declarative and injunctive relief. The Company filed its answer on February 24, 2004. The Company has strong defenses against these lawsuits and is vigorously defending them. Although these lawsuits are subject to 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 actions 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. 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.

23. Commercial Commitments and Guarantees Commercial Commitments The Company had outstanding Letters of Credit of $103 as of January 29, 2004, all of which were issued under separate agreements with multiple financial institutions. These agreements are not associated with the Company's credit facilities. Of the $103 outstanding at year end, $83 were standby letters of credit covering primarily workers' compensation or performance obligations. The remaining $20 were commercial letters of credit supporting the Company's merchandise import program. The Company paid issuance fees that varied, depending on type, up to 0.90% of the outstanding balance of the letter of credit.

Guarantees
The Company provides guarantees, indemnifications and assurances to others in the ordinary course of its business. The Company has evaluated its agreements that contain guarantees and indemnification clauses in accordance with the guidance of FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others".

The Company is contingently liable for certain operating leases that were assigned to third parties in connection with various store closures and dispositions. If any of these third parties were to fail to perform their obligations under the lease, the Company could be responsible for the lease obligations. In 2003, the Company was notified that certain of these third parties have become insolvent and are seeking bankruptcy protection. At January 29, 2004, approximately 26 store leases for which the Company is contingently liable were subject to the bankruptcy proceedings of such third parties and 22 of such had been rejected by the applicable third party. The Company recorded pre-tax charges of $20 in 2003, which represents the remaining minimum lease payments and other payment obligations under the 22 rejected leases, less estimated sublease income and discounted at the Company's credit-adjusted risk free interest rate. As of January 29, 2004, the Company had remaining guarantees on approximately 192 stores with leases extending through 2026. Assuming that each respective purchaser became insolvent, an event the Company believes to be remote because of the wide dispersion among third parties and remedies available, the minimum future undiscounted payments, exclusive of any potential sublease income, are $273.

In connection with the merger between the Company and American Stores Company, the Company was made party to and guaranteed a $200 American Stores Company bank term note due July 2004; this obligation is reflected in the Company's Consolidated Balance Sheet as of January 29, 2004 and January 30, 2003.

58

The Company enters into a wide range of indemnification arrangements in the ordinary course of business. These include tort indemnifications, tax indemnifications, indemnifications against third party claims arising out of arrangements to provide services to Albertsons and indemnifications in merger and acquisition agreements. It is difficult to quantify the maximum potential liability under these indemnifications; however at January 29, 2004 the Company was not aware of any material liabilities arising from these indemnifications.

24. Computation of Earnings Per Share

                                                        2003                      2002                      2001
---------------------------------------------- ----------------------    -----------------------    ----------------------

                                                  Diluted     Basic         Diluted      Basic         Diluted     Basic
                                               ------------ ---------    ----------- -----------    ----------- ----------
Earnings (loss) from:
    Continuing operations                           $ 556     $ 556          $ 865       $ 865          $ 496      $ 496
    Discontinued operations                             -         -           (286)       (286)             5          5
    Cumulative effect of change in
    accounting principle                                -         -            (94)        (94)             -          -
                                                    ------    ------        -------      ------         ------     ------
        Net earnings                                $ 556     $ 556          $ 485       $ 485          $ 501      $ 501
                                                    ======    ======         ======      ======         ======     ======

Weighted average common shares outstanding            368       368            397         397            406        406
                                                              ======                     ======                    ======
Potential common share equivalents                      -                        2                          2
                                                    ------                   ------                     ------
Weighted average shares outstanding                   368                      399                        408
                                                    ======                   ======                     ======

Earnings (loss) per common share and common
 share equivalents:
    Continuing operations                           $1.51     $1.51          $2.17       $2.18          $1.22      $1.22
    Discontinued operations                             -         -          (0.72)      (0.72)          0.01       0.01
    Cumulative effect of change in
     accounting principle                               -         -          (0.23)      (0.24)             -          -
                                                   -------   ------         -------     -------        -------    -------
        Net earnings                                $1.51     $1.51          $1.22       $1.22          $1.23      $1.23
                                                   =======   =======        =======     =======        =======    =======

Calculation of potential common share equivalents:
   Options to purchase potential common
    shares                                             11                       10                         17
   Potential common shares assumed purchased
    with potential proceeds                           (11)                      (8)                       (15)
                                                   -------                    ------                   -------
   Potential common share equivalents                   -                        2                          2
                                                   =======                    ======                   =======

Calculation of potential common shares
 assumed purchased with potential
 proceeds:
   Potential proceeds from exercise of
    options to purchase common shares               $ 221                    $ 227                      $ 455
   Common stock price used under treasury
    stock method                                   $20.33                   $27.77                     $31.12
                                                   =======                  =======                    ======
   Potential common shares assumed purchased
    with potential proceeds                            11                        8                         15
                                                   =======                  =======                    =======

Outstanding options excluded in 2003, 2002 and 2001 (option price exceeded the average market price during the period) amounted to 29.4 million shares, 20.2 million shares and 9.4 million shares, respectively.

25. Subsequent Events Southern California Labor Dispute Settlement The southern California Labor Dispute continued through the first month of fiscal year 2004. The Labor Dispute ended with the ratification of a new collective bargaining agreement on February 28, 2004. Under the terms of the new collective bargaining agreement, the Company agreed to fund a one-time contribution to the union health and welfare fund of approximately $36 as well as to make strike ratification bonus payments of approximately $10. These amounts will be charged to earnings in the first quarter of fiscal year 2004.

Acquisition of Shaw's
On March 25, 2004, the Company entered into a stock purchase agreement with J Sainsbury plc and JS USA Holdings Inc. to acquire all of the outstanding capital stock of the entities which conduct J Sainsbury plc's U.S. retail grocery store business for approximately $2,100 in cash, as well as the

59

assumption of approximately $368 in capital leases. The Company intends to use a combination of cash-on-hand and commercial paper to finance a portion of the purchase price of the acquisition. The commercial paper the Company intends to issue will be backed by the Company's existing credit facilities and/or a new senior revolving bridge facility. The Company is also contemplating various financing alternatives, including the issuance of debt and/or equity, to finance a portion of the purchase price and/or to repay some of the commercial paper.

The operations to be acquired consists of approximately 200 grocery stores in the New England area operated under the banners Shaw's and Star Markets. The operations to be acquired ("Shaw's") had sales of approximately $4,600 for the fiscal year ended February 28, 2004 and approximately $4,400 for the fiscal year ended March 1, 2003.

The acquisition is expected to close in the second quarter of 2004 following the satisfaction or waiver of certain closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act and Shaw's fiscal year ended February 28, 2004 financial statement audit reflecting a specified minimum EBITDA. Because of the goodwill that is expected to be generated as a result of the acquisition, the Company will have to obtain prospective waivers from the lenders under two of the Company's existing credit facilities in order to remain in compliance with the consolidated tangible net worth covenant contained in these agreements. No amounts were outstanding under these facilities as of January 29, 2004.

26. Quarterly Financial Data (Unaudited)

(Dollars in millions, except per share data -
Unaudited)                                             First      Second       Third       Fourth        Year
--------------------------------------------------- ---------- ----------- ----------- ------------ -----------
2003
Sales                                                $ 8,937     $ 9,053     $ 8,796      $ 8,650    $ 35,436
Gross profit                                           2,545       2,655       2,526        2,404      10,130
Operating profit                                         381         369         255          313       1,318
Net earnings                                             172         162          92          130         556
Earnings per share:
   Basic                                                0.47        0.44        0.25         0.35        1.51
   Diluted                                              0.47        0.44        0.25         0.35        1.51
--------------------------------------------------- ---------- ----------- ----------- ------------ -----------
2002
Sales                                                $ 8,921     $ 8,941     $ 8,657      $ 9,107    $ 35,626
Gross profit                                           2,623       2,631       2,529        2,595      10,378
Operating profit                                         487         520         385          425       1,817
(Loss) earnings from discontinued operations            (303)         14          (2)           5        (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
--------------------------------------------------- ---------- ----------- ----------- ------------ -----------

Item 9. Change In and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Management of the Company, including the Chief Executive Officer and Chief Financial Officer of the Company, have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of January 29, 2004. 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 Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms. There were no changes in the Company's internal control over financial reporting that occurred during the Company's most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

60

PART III

Item 10. Directors and Executive Officers of the Registrant.

The information regarding directors and nominees for directors of the Company is presented under the headings "Board of Directors - Corporate Governance" and "Election of Directors" in the Company's definitive proxy statement for use in connection with the 2004 Annual Meeting of Shareholders (the "Proxy Statement") to be filed within 120 days after the Company's fiscal year ended January 29, 2004. The information contained under this heading is incorporated herein by this reference thereto. Information regarding the executive officers of the Company is included in this Annual Report on Form 10-K as Item 3A of Part I as permitted by Instruction 3 to Item 401(b) of Regulation S-K.

The Company has adopted a code of ethics that applies to its Chief Executive Officer, Chief Financial Officer and Controller. This code of ethics is available on the Company's Web site at www.albertsons.com.

Item 11. Executive Compensation.

Information concerning executive compensation is presented under the headings "Compensation of Executive Officers - Summary Compensation Table," "Compensation of Executive Officers - Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values," "Compensation of Executive Officers - Option Grants In Last Fiscal Year," and "Compensation of Executive Officers - Retirement Benefits" in the Proxy Statement. Information concerning director compensation is presented under the heading "Election of Directors - Compensation of Directors" in the Proxy Statement. The information contained under these headings 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 "Compensation of Executive Officers - Equity Compensation Plan Information" in the Proxy Statement. The information contained under these headings 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. The information contained under this heading is incorporated herein by this reference thereto.

Item 14. Principal Accountant Fees and Services.
Information concerning principal accountant fees and services is presented under the heading "Principal Accountant Fees and Services" in the Proxy Statement. The information contained under this heading is incorporated herein by this reference thereto.

61

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 30 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 65 through 73 hereof.

(b) The following reports on Form 8-K were filed or furnished during the quarter ended January 29, 2004:

1) Current report on Form 8-K dated November 13, 2003 furnished pursuant to Item 9, Regulation FD Disclosure, regarding the Company's fiscal year 2003 earnings guidance.

2) Current report on Form 8-K dated December 5, 2003 furnished pursuant to Item 12, Results of Operations and Financial Condition, including the Company's press release which discussed the Company's sales and earnings for the third quarter of 2003.

62

Signatures

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

ALBERTSON'S, INC.

                                            By:  \S\ Felicia D. Thornton
                                            ------------------------------------
                                                  Felicia D. Thornton
                                                  (Executive Vice President
                                                  and Chief Financial Officer)




Date:  March 26, 2004

63

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 March 26, 2004.

         \S\ Lawrence R. Johnston                                \S\ Felicia D. Thornton
---------------------------------------------       -----------------------------------------------
           Lawrence R. Johnston                                    Felicia D. Thornton
      (Chairman of the Board, Chief                             (Executive Vice President
     Executive Officer, President and                          and Chief Financial Officer)
                Director)


           \S\ Peter F. Collins                                      \S\ A. Gary Ames
---------------------------------------------       -----------------------------------------------
             Peter F. Collins                                          A. Gary Ames
          (Group Vice President                                         (Director)
             and Controller)


           \S\ Cecil D. Andrus                                     \S\ Pamela G. Bailey
---------------------------------------------       -----------------------------------------------
             Cecil D. Andrus                                         Pamela G. Bailey
                (Director)                                              (Director)



             \S\ Teresa Beck                                       \S\ Henry I. Bryant
---------------------------------------------       -----------------------------------------------
               Teresa Beck                                           Henry I. Bryant
                (Director)                                              (Director)


           \S\ Paul I. Corddry                                      \S\ Bonnie G. Hill
---------------------------------------------       -----------------------------------------------
             Paul I. Corddry                                          Bonnie G. Hill
                (Director)                                              (Director)


            \S\ Jon C. Madonna                                    \S\ Beth M. Pritchard
---------------------------------------------       -----------------------------------------------
              Jon C. Madonna                                        Beth M. Pritchard
                (Director)                                              (Director)


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


            \S\ Will M. Storey
---------------------------------------------
              Will M. Storey
                (Director)

64

Index to Exhibits Filed with the Annual Report on Form 10-K for the Year Ended January 29, 2004

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 amended on March 15, 2001 and December 5, 2003.

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 4.1(b)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 3 of
          Amendment to Form 8-A Registration Statement filed with the Commission
          on March 25, 1999.

4.1.3     Amendment  No.  Three to  Stockholder  Rights  Plan  Agreement  (dated
          September 26, 2003) is  incorporated  herein by reference to Exhibit 6
          of  Amendment  to Form  8-A  Registration  Statement  filed  with  the
          Commission on September 30, 2003.

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.*

65

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)
          is incorporated herein by reference to Exhibit 10.6.4 of Form 10-K for
          the year ended January 30, 2003.*

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) is incorporated herein by reference to Exhibit 10.10.1 of Form 10-K for the year ended January 30, 2003.*

10.10.2 Second Amendment to the 2000 Deferred Compensation Plan (dated July 18, 2001) is incorporated herein by reference to Exhibit 10.10.2 of Form 10-K for the year ended January 30, 2003.*

66

Number Description
10.10.3 Third Amendment to the 2000 Deferred Compensation Plan (dated December 31, 2001) is incorporated herein by reference to Exhibit 10.10.3 of Form 10-K for the year ended January 30, 2003.*

10.10.4 Fourth Amendment to Deferred Compensation Plan (dated December 22,

          2003).*

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.*

10.12     [Intentionally left blank]

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) is incorporated herein by reference to Exhibit 10.13.7 of Form 10-K for the year ended January 30, 2003.*

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) is incorporated herein by reference to Exhibit 10.14.1 of Form 10-K for the year ended January 30, 2003.*

10.14.2 Second Amendment to the Executive ASRE Makeup Plan (dated December 31,

          2001) is  incorporated  herein by reference to Exhibit 10.14.2 of Form
          10-K for the year ended January 30, 2003.*

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.*

67

Number Description

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) is  incorporated  herein by reference to Exhibit 10.15.3 of Form
          10-K for the year ended January 30, 2003.*

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.*

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.*

68

Number    Description
------    -----------

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) is incorporated herein by reference to Exhibit 10.20.4 of Form 10-K for the year ended January 30, 2003.*

10.20.5 Amendment to 1990 Deferred Compensation Plan (dated May 1, 2001) is incorporated herein by reference to Exhibit 10.20.5 of Form 10-K for the year ended January 30, 2003.*

10.20.6 Amendment to 1990 Deferred Compensation Plan (dated December 31, 2001 to be effective May 1, 2001) is incorporated herein by reference to Exhibit 10.20.6 of Form 10-K for the year ended January 30, 2003.*

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) is incorporated herein by reference to Exhibit 10.21.3 of Form 10-K for the year ended January 30, 2003.*

10.21.4 Amendment to Non-Employee Directors' Deferred Compensation Plan (dated December 22, 2003).*

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.*

69

Number Description

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.*

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 7, 2003).

10.29.1 First Amendment to Amended and Restated Credit Agreement (364-day) (dated February 19, 2004).

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.*

70

Number    Description
------    -----------

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.*

10.36.2 Letter Agreement between the Company and Peter L. Lynch dated July 24, 2003 is incorporated herein by reference to Exhibit 10.36.2 of Form

          10-Q for the quarter ended July 31, 2003.*

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.*

71

Number    Description
------    -----------

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.*

10.47 Long-term Incentive Plan (effective as of February 1, 2003) is incorporated by reference to Exhibit 10.47 of Form 10-Q for the quarter ended May 1, 2003.*

10.48 Form of Director Indemnification Agreement is incorporated herein by reference to Exhibit 10.47 of Form 10-Q for the quarter ended October

          30, 2003.*

10.49     Credit Agreement (364-day) (dated February 13, 2004).

21        Subsidiaries of the Registrant

23        Independent Auditors' Consent - Deloitte & Touche LLP

31.1      Certification  of the Chief Executive  Officer pursuant to Section 302
          of the Sarbanes-Oxley Act of 2002.

72

31.2      Certification  of the Chief Financial  Officer pursuant to Section 302
          of the Sarbanes-Oxley Act of 2002.

32        Certification  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.

73

Exhibit 3.2

ALBERTSON'S, INC.

BY-LAWS

Amended March 15, 2001 and December 5, 2003


                                TABLE OF CONTENTS
                                                                            Page
                                    ARTICLE I
Section 1.1       Registered Office..........................................  1
Section 1.2       Other Offices..............................................  1

                                   ARTICLE II

MEETINGS OF THE STOCKHOLDERS

Section 2.1       Place of Meetings..........................................  1
Section 2.2       Annual Meetings............................................  1
Section 2.3       Notice of Annual Meeting...................................  1
Section 2.4       List of Stockholders Entitled to Vote......................  1
Section 2.5       Special Meetings...........................................  2
Section 2.6       Notice of Special Meeting..................................  2
Section 2.7       Quorum.....................................................  2
Section 2.8       Voting.....................................................  2
Section 2.9       Proxies....................................................  3
Section 2.10      Nature of Business at Meetings of Stockholders.............  3

                  A.       Limitation........................................  3
                  B.       Notice Requirement................................  3
                  C.       Timeliness of Notice..............................  4
                  D.       Form of Notice....................................  4
                  E.       Business Brought Improperly.......................  4

Section 2.11      Stock Ledger...............................................  4
Section 2.12      Record Date in General.....................................  4
Section 2.13      Record Date for Stockholder Action by Written Consent......  5
Section 2.14      Inspectors of Election.....................................  5

ARTICLE III

DIRECTORS

Section 3.1       Number and Election of Directors...........................  6
Section 3.2       Nomination of Directors....................................  6

                  A.       Limitation........................................  6
                  B.       Notice Requirement................................  6
                  C.       Timeliness of Notice..............................  7
                  D.       Form of Notice....................................  7
                  E.       Defective Nomination..............................  7

Section 3.3       Vacancies..................................................  7
Section 3.4       Resignations and Removals of Directors.....................  8
Section 3.5       Duties and Powers..........................................  8
Section 3.6       Indemnification............................................  8

i

                  A.       Power to Indemnify in Actions, Suits or Proceedings
                           Other than Those by or in the Right of the
                           Corporation.......................................  8
                  B.       Power to Indemnify in Actions, Suits or Proceedings
                           by or in the Right of the Corporation.............  9
                  C.       Authorization of Indemnification..................  9
                  D.       Good Faith Defined..................................9
                  E.       Indemnification by a Court.........................10
                  F.       Expenses Payable in Advance........................10
                  G.       Nonexclusivity of Indemnification and Advancement
                           of Expenses........................................10
                  H.       Insurance..........................................10
                  I.       Certain Definitions................................11
                  J.       Survival of Indemnification and Advancement of
                           Expenses...........................................11
                  K.       Limitation on Indemnification......................11
                  L.       Indemnification of Employees and Agents............11

Section 3.7       Retirement Age..............................................12
Section 3.8       Meetings....................................................12
Section 3.9       Quorum......................................................12
Section 3.10      Actions of Board............................................12
Section 3.11      Meetings by Means of Conference Telephone...................12
Section 3.12      Committees..................................................12
Section 3.13      Compensation................................................13
Section 3.14      Interested Directors........................................13

ARTICLE IV

NOTICES

Section 4.1 Notices.....................................................13
Section 4.2 Waiver of Notice............................................14

ARTICLE V

OFFICERS

Section 5.1       Officers Chosen by the Board................................14
Section 5.2       Officers Chosen by the Chief Executive Officer..............14
Section 5.3       Qualification...............................................14
Section 5.4       Voting Securities Owned by the Corporation..................15
Section 5.5       Chairman of the Board.......................................15
Section 5.6       Chief Operating Officer.....................................15
Section 5.7       Vice Chairman of the Corporation............................15
Section 5.8       President...................................................15
Section 5.9       Chief Executive Officer.....................................15
Section 5.10      Vice Presidents.............................................16
Section 5.11      Secretary...................................................16
Section 5.12      Assistant Secretaries.......................................16
Section 5.13      Treasurer...................................................16
Section 5.14      Assistant Treasurers........................................17

ii

ARTICLE VI

STOCK

Section 6.1       Form of Certificates........................................17
Section 6.2       Signatures..................................................17
Section 6.3       Lost, Destroyed, Stolen or Mutilated Certificates...........17
Section 6.4       Transfers...................................................18
Section 6.5       Transfer and Registry Agents................................18
Section 6.6       Registered Stockholders.....................................18

ARTICLE VII

GENERAL PROVISIONS

Section 7.1       Dividends...................................................18
Section 7.2       Disbursements...............................................18
Section 7.3       Fiscal Year.................................................18
Section 7.4       Corporate Seal..............................................19
Section 7.5       Election Not to Be Subject to Idaho Business
                  Combination Law.............................................19
Section 7.6       Election Not to Be Subject to Idaho Control Share
                  Acquisition Law.............................................19
Section 7.7       Entire Board of Directors...................................19

ARTICLE VIII

AMENDMENTS

Section 8.1 Amendments..................................................19

iii

ALBERTSON'S, INC.

BY-LAWS

ARTICLE I

OFFICES

Section 1.1 Registered Office. The registered office of Albertson's, Inc. ------------------ (the "Corporation") shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 1.2 Other Offices.
-------------- The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF THE STOCKHOLDERS

Section 2.1 Place of Meetings.
------------------- All meetings of the stockholders for the election of directors shall be held in the City of Boise, State of Idaho, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of the stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2.2 Annual Meetings.
---------------- Annual meetings of stockholders shall be held on the fourth Friday of May, if not a legal holiday and, if a legal holiday, then on the next day following that is not a legal holiday, at 10:00 o'clock
A.M., or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which the stockholders shall elect by written ballot a Board of Directors, and transact such other business as may be properly brought before the meeting.

Section 2.3 Notice of Annual Meeting.
------------------------- Written notice of the annual meeting, stating the place, date and hour of the meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.

Section 2.4 List of Stockholders Entitled to Vote.
----------------------------------------- The officer who has charge of the stock ledger of the Corporation shall prepare and make, or shall cause to be prepared and made, at least ten days before every meeting of stockholders a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least

1

ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present; provided, however, the failure to do so shall not offset the validity of any meeting.

Section 2.5 Special Meetings.
----------------- Unless otherwise prescribed by statute or by the certificate of incorporation of the Corporation, as amended and restated from time to time or by one or more certificates of designation filed on behalf of the Corporation pursuant to Section 151(f) of the Delaware General Corporation Law (such certificate of incorporation and such certificate or certificates of designation being collectively referred to herein as the "Certificate of Incorporation"), special meetings of the stockholders, for any purpose or purposes, may be called only by the chairman of the Board of Directors or by the vice chairman or president of the Corporation and shall be called by the chairman or vice chairman of the Board of Directors or by the vice chairman, president or secretary of the Corporation at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting. At a special meeting of the stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors.

Section 2.6 Notice of Special Meeting.
------------------------- Written notice of a special meeting, stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.

Section 2.7 Quorum.
------ The holders of a majority of the shares of common stock of the Corporation (the "Common Stock") issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by law or by the Certificate of Incorporation. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting not less than ten nor more than sixty days before the date of the meeting.

Section 2.8 Voting.
------- Each holder of Common Stock shall be entitled to cast one vote for each share of Common Stock standing in his or her name on the books of the Corporation, and each holder of preferred stock shall be entitled to cast such number of votes as is provided in the Certificate of Incorporation or Certificate of Designation relating to such preferred stock, voting separately from or together with the holders of Common Stock as provided in the Certificate of Incorporation or Certificate of Designation relating to such preferred stock. The Board of Directors, in its discretion, or the officer of the Corporation

2

presiding at a meeting of stockholders, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot.

Section 2.9 Proxies.
-------- Any stockholder entitled to vote may do so in person or by his or her proxy appointed by an instrument in writing subscribed by such stockholder or by his or her attorney thereunto authorized, delivered to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date, unless said proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for him or her as proxy, either of the following shall constitute a valid means by which a stockholder may grant such authority: (a) a stockholder may execute a writing authorizing another person or persons to act for him or her as proxy. Execution may be accomplished by the stockholder or his or her authorized officer, director, employee or agent signing such writing or causing his or her signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature; or (b) a stockholder may authorize another person or persons to act for him or her as proxy by transmitting or authorizing the transmission of a telegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission; provided, however, that any such telegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram or other electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

Section 2.10 Nature of Business at Meetings of Stockholders.

A. Limitation. ----------- Except as otherwise provided by law or the Certificate of Incorporation, no business may be transacted at an annual meeting of stockholders, other than business that is (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any holder of Common Stock (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.10 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 2.10.

B. Notice Requirement.
------------------- In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof to the secretary of the Corporation in accordance with subsection C of this Section 2.10 in proper written form in accordance with subsection D of this Section 2.10.

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C. Timeliness of Notice.
--------------------- (1) To be timely, a stockholder's notice to the secretary of the Corporation of business to be brought before a meeting of stockholders in accordance with Rule 14a-8 promulgated pursuant to the Securities and Exchange Act of 1934 must be delivered to or mailed and receivedt the principal executive offices of the Corporation in accordance with the deadline specified in subsection (e) of that rule. (2) To be timely, a stockholder's notice to the secretary of the Corporation of business to be brought before an annual meeting other than in accordance with Rule 14a-8 promulgated pursuant to the Securities and Exchange Act of 1934 must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that an annual meeting is called for a date that is not within 30 days before or after such anniversary date, in order to be timely, notice by the stockholder must be so received not later than the close of business on the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever occurs first.

D. Form of Notice. ----------------- To be in proper written form, a stockholder's notice to the secretary of the Corporation of business to be brought before an annual meeting must set forth as to each matter such stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and record address of such stockholder, (c) the class or series and number of shares of stock of the Corporation that are owned beneficially or of record by such stockholder, (d) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest such stockholder has in such business and (e) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

E. Business Brought Improperly.
---------------------------- No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 2.10; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 2.10 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, such chairman shall declare to the meeting that the business was not properly brought before the meeting, and such business shall not be transacted.

Section 2.11 Stock Ledger.
------------- The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled (a) to examine the stock ledger, the list required by Section 2.4 of these by-laws or the books of the Corporation or (b) to vote in person or by proxy at any meeting of stockholders.

Section 2.12 Record Date in General.
----------------------- In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to

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exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action (other than an action to be taken by written consent without a meeting), the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall not be more than sixty nor less than ten days before the date of such meeting; and (b) in the case of any other action (other than an action to be taken by written consent without a meeting), shall not be more than sixty days prior to such other action. If no record date is fixed: (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (b) the record date for determining stockholders for any other purpose (other than an action to be taken by written consent without a meeting) shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 2.13 Record Date for Stockholder Action by Written Consent.
--------------------------------------------------------- In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the secretary of the Corporation, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of stockholders meetings are recorded, to the attention of the secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. No consent to corporate action in writing without a meeting shall be effective unless delivered to the Corporation within sixty days following the record date relating thereto fixed pursuant to this Section 2.13.

Section 2.14 Inspectors of Election.
------------------------- In advance of any meeting of stockholders, the Board of Directors by resolution or the chairman of the Board of Directors or the vice chairman, president or secretary of the Corporation shall appoint one or more inspectors of election to act at the meeting and make a written report thereof. One or more other persons may be designated as

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alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is present, ready and willing to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector shall have the duties prescribed by law, shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law.

ARTICLE III

DIRECTORS

Section 3.1 Number and Election of Directors.
-------------------------------- The number of directors which shall constitute the whole Board shall be not less than three nor more than twenty-one. Within the limits above specified, the number of directors shall be determined by resolution of the Board or by the vote at the annual meeting of the holders of at least three-fourths of the outstanding shares of stock then entitled to vote in elections of directors. The Board shall be divided into three classes. Any increase or decrease in the number of directors shall be apportioned among the classes so as to make all classes as nearly equal in number as possible. No decrease in the authorized number of directors shall shorten the term of any incumbent director. At each annual meeting the successors to the class of directors whose term is then expiring shall be elected to hold office for a term of three years and until their respective successors are elected. Directors need not be stockholders. The chairman of the Board of Directors shall be an officer of the Corporation, and the vice chairman of the Board of Directors need not be an officer of the Corporation. The vice chairman of the Board of Directors shall be chosen by the Board of Directors and shall, in the absence of the chairman of the Board of Directors, preside at meetings of the Board of Directors.

Section 3.2 Nomination of Directors.

A. Limitation. ----------- Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any holder of Common Stock (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 3.2 and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this
Section 3.2.

B. Notice Requirement.
-------------------- In addition to any other applicable requirements, for a nomination of a director to be made by a stockholder, such stockholder must have given timely notice thereof to the secretary of the Corporation in accordance with subsection C of this Section 3.2 in proper written form in accordance with subsection D of this Section 3.2.

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C. Timeliness of Notice. ---------------------- To be timely, a stockholder's notice to the secretary of the Corporation of a nomination of a director must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting not less than 90 days nor more than 120 days prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary, in order to be timely, notice by the stockholder must be so received not later than the close of business on the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever occurs first; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever occurs first.

D. Form of Notice.
--------------- To be in proper written form, a stockholder's notice to the secretary of the Corporation of a nomination of a director must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of stock of the Corporation that are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of stock of the Corporation that are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

E. Defective Nomination.
--------------------- No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.2. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective, and such defective nomination shall be disregarded.

Section 3.3 Vacancies.
---------- Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director so chosen shall hold office until the next annual meeting of stockholders, regardless of the class for which such

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director has been chosen, and until his or her successor has been elected, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If at the time of filling any vacancy or any newly created directorship the directors then in office shall constitute less than a majority of the entire Board of Directors (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

Section 3.4 Resignations and Removals of Directors.
--------------------------------------- Any director of the Corporation may resign at any time, by giving written notice to the chairman of the Board of Directors, or to the vice chairman, president or secretary of the Corporation. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Except as otherwise required by law and subject to the rights, if any, of the holders of shares of preferred stock then outstanding, any director or the entire Board of Directors may be removed from office at any time, but only for cause, and only by the affirmative vote of the holders of at least a majority in voting power of the issued and outstanding stock of the Corporation entitled to vote in the election of directors. As used in this Section 3.4, the term "cause" shall mean (a) conviction of a crime involving moral turpitude, (b) administrative agency determination of conduct involving moral turpitude or (c) a determination in good faith, by a majority in voting power of the issued and outstanding stock of the Corporation entitled to vote in the election of directors after a hearing before at minimum such a majority in voting power, of conduct involving moral turpitude materially adverse to the interests of the Corporation.

Section 3.5 Duties and Powers.
------------------ The business of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these by-laws directed or required to be exercised or done by the stockholders.

Section 3.6 Indemnification.

A. Power to Indemnify in Actions, Suits or Proceedings Other

than Those by or in the Right of the Corporation.
------------------------------------------------- Subject to subsection C of this Section 3.6, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, such person had no reasonable cause to believe his or her conduct

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was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that such person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

B. Power to Indemnify in Actions, Suits or Proceedings by or

in the Right of the Corporation.
-------------------------------- Subject to subsection C of this Section 3.6, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

C. Authorization of Indemnification.
--------------------------------- Any indemnification under this Section 3.6 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in subsection A or subsection B of this Section 3.6, as the case may be. Such determination shall be made (a) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or
(b) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (c) by the stockholders. To the extent, however, that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.

D. Good Faith Defined.
------------------- For purposes of any determination under subsection C of this Section 3.6, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his or her conduct was unlawful, if such person's action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person

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by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this subsection D shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this subsection D shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in subsection A or subsection B of this
Section 3.6, as the case may be.

E. Indemnification by a Court.
--------------------------- Notwithstanding any contrary determination in the specific case under subsection C of this Section 3.6, and notwithstanding the absence of any determination thereunder, any director or officer may apply to the Court of Chancery of the State of Delaware or any other court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under subsection A and subsection B of this
Section 3.6. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standards of conduct set forth in subsection A or subsection B of this Section 3.6, as the case may be. Neither a contrary determination in the specific case under subsection C of this Section 3.6 nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this subsection E shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.

F. Expenses Payable in Advance.
---------------------------- Expenses incurred by a director or officer in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Section 3.6.

G. Nonexclusivity of Indemnification and Advancement of

Expenses.
--------- The indemnification and advancement of expenses provided by or granted pursuant to this Section 3.6 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation or any by-law, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in subsection A and subsection B of this Section 3.6 shall be made to the fullest extent permitted by law. The provisions of this Section 3.6 shall not be deemed to preclude the indemnification of any person who is not specified in subsection A or subsection B of this Section 3.6 but whom the Corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware (the "GCL"), or otherwise.

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H. Insurance.
---------- The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Section 3.6.

I. Certain Definitions.
-------------------- For purposes of this Section 3.6, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger that, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Section 3.6 with respect to the resulting or surviving corporation as such person would have stood with respect to such constituent corporation if its separate existence had continued. For purposes of this Section 3.6, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Section 3.6.

J. Survival of Indemnification and Advancement of Expenses.

The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 3.6 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

K. Limitation on Indemnification.
------------------------------ Notwithstanding anything contained in this Section 3.6 to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by subsection E hereof), the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation.

L. Indemnification of Employees and Agents.
---------------------------------------- The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this
Section 3.6 to directors and officers of the Corporation.

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Section 3.7 Retirement Age.
---------------- No director after having attained the age of 70 years shall be allowed to run for re-election or reappointment to the Board of Directors.

Section 3.8 Meetings.
--------- The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held at such time and at such place as may be from time to time determined by the Board of Directors and, unless required by resolution of the Board of Directors, without notice. Special meetings of the Board of Directors may be called by the chairman of the Board of Directors, by the vice chairman or president of the Corporation or by a majority of the directors then in office. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight hours before the date of the meeting, by telephone, facsimile, telegram or other electronic means on twenty-four hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

Section 3.9 Quorum.
------- Except as may be otherwise required by law, the Certificate of Incorporation or these by-laws, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.

Section 3.10 Actions of Board.
----------------- Unless otherwise restricted by the Certificate of Incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or committee.

Section 3.11 Meetings by Means of Conference Telephone.
------------------------------------------ Unless otherwise provided by the Certificate of Incorporation or these by-laws, members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.11 shall constitute presence in person at such meeting.

Section 3.12 Committees.
----------- The Board of Directors may designate one or more committees, each committee to consist of two or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act

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at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in one or more resolutions adopted by of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the GCL to be submitted to stockholders for approval or (ii) adopting, amending or repealing any by-law of the Corporation. Each committee shall keep regular minutes and report to the Board of Directors when required.

Section 3.13 Compensation.
------------- The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors and/or a stated salary, or such other emoluments as the Board of Directors shall from time to time determine. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 3.14 Interested Directors.
--------------------- No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because such person's or their votes are counted for such purpose if (a) the material facts as to such person's or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (b) the material facts as to such person's or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes the contract or transaction.

ARTICLE IV

NOTICES

Section 4.1 Notices.
-------- Whenever written notice is required by law, the Certificate of Incorporation or these by-laws to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person's address as it appears on the records of the Corporation, with postage

13

thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by telegram, facsimile or other electronic means.

Section 4.2 Waiver of Notice.
----------------- Whenever any notice is required by law, the Certificate of Incorporation or these by-laws to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting, present by person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of stockholders, directors or members of a committee of directors need be specified in any written waiver of notice except to the extent required by law, the Certificate of Incorporation or these by-laws.

ARTICLE V

OFFICERS

Section 5.1 Officers Chosen by the Board.
----------------------------- The following officers of the Corporation shall be chosen by the Board of Directors at its meeting held either the day before or the day of each annual meeting of stockholders: a chairman of the Board of Directors (who must be a director) and a president of the Corporation. The Board of Directors shall designate the chairman of the Board of Directors, the chief executive officer and the president of the Corporation. A vice chairman of the Corporation may be chosen by the Board of Directors at its meeting held either the day before or the day of each annual meeting of stockholders. The Board of Directors may also choose such other officers as it deems necessary or appropriate. The officers of the Corporation chosen by the Board of Directors shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. Any officer chosen or appointed by the Board of Directors may be removed from office at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any of such offices shall be filled by the Board of Directors. The salaries of the officers of the Corporation chosen by the Board of Directors shall be fixed by the Board of Directors.

Section 5.2 Officers Chosen by the Chief Executive Officer.
----------------------------------------------- The chief executive officer may appoint any vice presidents (including executive vice presidents, senior vice presidents and group vice presidents), the secretary, any assistant secretaries, the treasurer, any assistant treasurers, presidents and other officers of subsidiary corporations and such other officers and agents as he or she may deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the chief executive officer, who may remove any such officers from office at any time.

Section 5.3 Qualification.
-------------- Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these By-laws. The officers of the Corporation need not be

14

stockholders of the Corporation nor, except in the case of the chairman of the Board of Directors, need such officers be directors of the Corporation.

Section 5.4 Voting Securities Owned by the Corporation.
------------------------------------------- Instruments relating to securities owned by the Corporation, including powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the chairman of the Board of Directors or by the vice chairman or president of the Corporation, and any such officers may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities that the Corporation, as the owner thereof, might have exercised and possessed if present. The Board of Directors may from time to time confer, by resolution, like powers upon any other person or persons.

Section 5.5 Chairman of the Board.
---------------------- The chairman of the Board of Directors shall preside at all meetings of the Board of Directors and shall possess the power to sign on behalf of the Corporation all certificates, contracts and other instruments the execution of which may be authorized by the Board of Directors. The chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these by-laws or by the Board of Directors.

Section 5.6 Chief Operating Officer.
------------------------ The chief operating officer shall possess the power to sign on behalf of the Corporation all certificates, contracts and other instruments the execution of which may be authorized by the Board of Directors. The chief operating officer shall have responsibility for the operations of the Corporation as authorized by the Board of Directors and shall perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these by-laws or by the Board of Directors.

Section 5.7 Vice Chairman of the Corporation.
--------------------------------- The vice chairman of the Corporation shall possess the power to sign on behalf of the Corporation all certificates, contracts and other instruments the execution of which may be authorized by the Board of Directors and shall perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these by-laws or by the Board of Directors.

Section 5.8 President.
---------- The president shall possess the power to sign on behalf of the Corporation all certificates, contracts and other instruments the execution of which may be authorized by the Board of Directors and shall perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these by-laws or by the Board of Directors.

Section 5.9 Chief Executive Officer.
------------------------ The chief executive officer shall possess the power to sign on behalf of the Corporation all certificates, contracts and other instruments the execution of which may be authorized by the Board of Directors. The chief executive officer shall preside at, or shall designate such other officer of the Corporation to preside at, meetings of stockholders. The chief executive officer shall have general and active

15

management of the business affairs of the Corporation, including the right to appoint such officers as provided for in Section 5.2 of these by-laws, and shall see that all orders and resolutions of the Board of Directors are carried into effect. The chief executive officer shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these by-laws or by the Board of Directors.

Section 5.10 Vice Presidents.
---------------- Each executive vice president, senior vice president or group vice president designated by the Board of Directors shall be vested with all powers and shall perform all the duties of the president in the absence or the disability of the president. Each vice president shall be vested with such powers and shall perform such duties granted or imposed upon him or her by the Board of Directors or by the chief executive officer at the time of his or her appointment to office or as from time to time may be assigned to him or her by these by-laws, by the chief executive officer or by the Board of Directors.

Section 5.11 Secretary.
---------- The secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings thereat in a book or books to be kept for that purpose and shall perform like duties for the standing committees when requested. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the chief executive officer, under whose supervision the secretary shall be. If the secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no assistant secretary, then either the Board of Directors or the chief executive officer may choose another officer to cause such notice to be given. The secretary shall have custody of the corporate seal of the Corporation, and the secretary or any assistant secretary, if there be one, shall have authority to affix the same to any instrument requiring it and, when so affixed, it may be attested by the signature of the secretary or by the signature of any such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

Section 5.12 Assistant Secretaries.
---------------------- Assistant secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the chief executive officer or the secretary, and in the absence of the secretary or in the event of his or her disability or refusal to act, shall perform the duties of the secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the secretary.

Section 5.13 Treasurer.
---------- The treasurer shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by or at the direction of the Board of Directors. The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the chief executive officer and the Board of Directors at its regular meetings, or when the Board of Directors so

16

requires, an account of all of his or her transactions as treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of treasurer and for the restoration to the Corporation, in case of the treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the treasurer's possession or under control of the treasurer belonging to the Corporation.

Section 5.14 Assistant Treasurers.
--------------------- Assistant treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the chief executive officer or the treasurer, and in the absence of the treasurer or in the event of the treasurer's disability or refusal to act, shall perform the duties of the treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the treasurer. If required by the Board of Directors, an assistant treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of assistant treasurer and for the restoration to the Corporation, in case of the assistant treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the assistant treasurer's possession or under control of the assistant treasurer belonging to the Corporation.

ARTICLE VI

STOCK

Section 6.1 Form of Certificates.
--------------------- Every holder of stock in the Corporation shall be entitled to have a certificate signed in the name of the Corporation, by (a) the chairman of the Board of Directors or the vice chairman, the president or an executive vice president of the Corporation and (b) the treasurer or an assistant treasurer or the secretary or an assistant secretary of the Corporation certifying the number of shares of stock of the Corporation owned by such holder.

Section 6.2 Signatures.
----------- Where a certificate is countersigned (a) by a transfer agent other than the Corporation or its employee or (b) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 6.3 Lost, Destroyed, Stolen or Mutilated Certificates.
-------------------------------------------------- The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such person's legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a

17

bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 6.4 Transfers.
---------- Stock of the Corporation shall be transferable in the manner prescribed by law and in these by-laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person's attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; provided, however, that such surrender and endorsement or payment of taxes shall not be required in any case in which the officers of the Corporation shall determine to waive such requirement. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "Canceled," with the date of cancellation, by the secretary or assistant secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

Section 6.5 Transfer and Registry Agents.
-----------------------------The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.

Section 6.6 Registered Stockholders.
------------------------ The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner a person registered on it books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

ARTICLE VII

GENERAL PROVISIONS

Section 7.1 Dividends.
---------- Subject to the requirements of the GCL and the provisions of the Certificate of Incorporation, dividends upon the stock of the Corporation may be declared by the Board of Directors at any regular or special meeting of the Board of Directors, and may be paid in cash, in property or in shares of the Corporation's stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, may deem proper as a reserve or reserves for any purpose, and the Board of Directors may modify or abolish any such reserve.

Section 7.2 Disbursements.
-------------- All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 7.3 Fiscal Year.
------------ The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

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Section 7.4 Corporate Seal.
--------------- The corporate seal shall have inscribed thereon the name of the Corporation and the words "Corporate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or fixed or reproduced or otherwise.

Section 7.5 Election Not to Be Subject to Idaho Business Combination Law.
---- The Corporation expressly elects not to be subject to the provisions of the Idaho Business Combination Law, codified as Chapter 17 of Title 30 of the Idaho Code.

Section 7.6 Election Not to Be Subject to Idaho Control Share Acquisition Law
--------------- The Corporation expressly elects not to be subject to the provisions of the Idaho Control Share Acquisition Law, codified as Chapter 16 of Title 30 of the Idaho Code.

Section 7.7 Entire Board of Directors.
-------------------------- As used in these by-laws, the term "entire Board of Directors" means the total number of directors that the Corporation would have if there were no vacancies.

ARTICLE VIII

AMENDMENTS

Section 8.1 Amendments.
----------- These by-laws may be altered, amended or repealed, in whole or in part, or new by-laws may be adopted by the Board of Directors or by the stockholders as provided in the Certificate of Incorporation.

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EXHIBIT 10.21.4

FOURTH AMENDMENT
TO ALBERTSONS NON-EMPLOYEE DIRECTORS'
DEFERRED COMPENSATION PLAN

WHEREAS, the Albertson's, Inc. Non-Employee Directors' Deferred Compensation Plan (the "Plan") was established effective January 1, 1990, and has previously been amended;

WHEREAS, Albertson's, Inc. desires to further amend the Plan to change the name of the Plan and to limit the Moody's Rate of Return with respect to deferrals made after December 31, 2003;

NOW, THEREFORE, the following amendments to the Plan are hereby adopted:

1. Section 1.17 of the Plan is amended and restated, effective January 1, 2003, to read in its entirety as follows:

1.17 "Plan" means the Albertsons Non-Employee Directors' Deferred Compensation Plan as set forth herein, as amended from time to time.

2. Section 5.4 of the Plan is amended, effective January 1, 2004, to replace all references to Sections 5.2 and 5.3 with "Article V."

3. Article V of the Plan is amended, effective January 1, 2004, to add new sections 5.5 and 5.6, to read in their entirety as follows:
...
5.5 Notwithstanding the foregoing to the contrary, with respect to Deferred Amounts deferred under the Plan after December 31, 2003, each month, during the Participant's directorship with the Employer, the balance of such Participant's Account shall be credited with a Rate of Return at the Moody's Rate without regard to when benefits first become distributable or the occurrence of a Change in Control.

5.6 Notwithstanding the forgoing to the contrary, with respect Deferred Amounts deferred under the Plan after December 31, 2003, each month, commencing on the first day of the termination of the Participant directorship with the Employer and continuing until the earlier of the Participant's reinstatement as a Director with the Employer or the complete distribution of the Participant's Account, the balance of the Participant's Account shall be credited with a Rate of Return equal to the Moody's Rate without regard to when benefits first become distributable or the occurrence of a Change in Control.

IN WITNESS WHEREOF, the Employer has caused this instrument to be executed by its officer, duly authorized by its Board of Directors, this 22nd day of December, 2003.

ALBERTSON'S, INC.

 By  /s/  John Sims
--------------------------------------------------
 Its  Executive Vice President and General Counsel


EXHIBIT 10.29

364-Day Credit Agreement (2003) EXECUTION VERSION


AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of March 7, 2003

among

ALBERTSON'S, INC.,

BANK OF AMERICA, N.A.

as Administrative Agent,

BANK ONE, NA,

as Syndication Agent,

UNION BANK OF CALIFORNIA, N.A. and
WELLS FARGO BANK, N.A.,

as Documentation Agents

and

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

Arranged by

Banc of America Securities LLC,

Sole Lead Arranger
and Sole Book Manager


Sf-1451502 364-Day Credit Agreement (2003)


AMENDED AND RESTATED CREDIT AGREEMENT

This Amended and Restated Credit Agreement (this "Agreement") is entered into as of March 7, 2003, among Albertson's, Inc., a Delaware corporation (the "Company"), the several financial institutions from time to time party to this Agreement (individually, a "Bank" and, collectively, the "Banks"), Bank One, NA, as syndication agent (in such capacity, the "Syndication Agent"), Union Bank of California, N.A. and Wells Fargo Bank, N.A., as documentation agents (in such capacity, the "Documentation Agents") and Bank of America, N.A., as administrative agent for itself and the Banks (in such capacity, the "Agent").

WHEREAS, the Company, the Banks party thereto and the Agent entered into a Credit Agreement dated as of March 22, 2000, as amended and restated as of March 15, 2001, and as amended and restated as of March 13, 2002, and as further modified by certain consents effective as of June 14, 2002 and July 5, 2002, respectively, (as in effect as of the date of this Agreement, the "Original Agreement") providing for a 364-day revolving credit facility; and

WHEREAS, the parties hereto desire to amend the Original Agreement as set forth herein and to restate the Original Agreement in its entirety to read as set forth in the Original Agreement with the amendments specified below, subject to the terms and conditions of this Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

1. Definitions; References; Interpretation.

(a) Unless otherwise specifically defined herein, each term used herein (including in the Recitals hereof) which is defined in the Original Agreement shall have the meaning assigned to such term in the Original Agreement.

(b) Each reference to "this Agreement", "hereof", "hereunder", "herein" and "hereby" and each other similar reference contained in the Original Agreement, and each reference to "the Credit Agreement" and each other similar reference in the other Loan Documents, shall from and after the Effective Date (as defined in subsection 2) refer to the Original Agreement as amended and restated hereby.

(c) The rules of interpretation set forth in Section 1.02 of the Original Agreement shall be applicable to this Agreement.

2. Amendments to Original Agreement. -------------------------------- Subject to the terms and conditions hereof, the Original Agreement is amended as follows, effective as of the date of satisfaction of the conditions set forth in Section 4 (the "Effective Date"):

(a) Amendments to Article I of the Original Agreement.

(1) The term "Notes" defined in the Original Agreement shall include from and after the Effective Date the Notes delivered under this Agreement.

Sf-1451502 1. 364-Day Credit Agreement (2003)


(2) The definition of "Closing Date" is amended in its entirety to provide as follows:

"Closing Date" means the date occurring on or before March 7, 2003 on which all conditions precedent set forth in Section 4.01 are satisfied or waived by all Banks (or, in the case of subsection 4.01(e), waived by the Person entitled to receive such payment).

(3) The definition of "Revolving Termination Date" is amended in its entirety to provide as follows:

"Revolving Termination Date" means the earlier to occur of:

(a) March 5, 2004, as the same may be extended from time to time pursuant to Section 2.16; and

(b) the date on which the Commitments terminate in accordance with the provisions of this Agreement.

(4) The defined term, "Company's 2000 Form 10-K" shall be deleted and a new defined term, "Company's 2001 Form 10-K" shall be added as follows:

"Company's 2001 Form 10-K" means the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2002, as filed with the SEC pursuant to the Exchange Act.

Accordingly, each reference to "Company's 2000 Form 10-K" in the Original Agreement shall be deemed to refer to "Company's 2001 Form 10-K," and each reference to February 1, 2001 in Sections 1.01, 4.02 and 5.10 of the Original Agreement shall be deemed to refer to January 31, 2002.

(b) Amendments to Article V of the Original Agreement.
(1) The two references to "November 1, 2001" in Section 5.10(b) of the Original Agreement shall be deleted and replaced by "October 31, 2002" for each such reference.

(c) Amendment to Schedule 2.01 (Amended) of the Original Agreement.
Schedule 2.01 (Amended) of the Original Agreement is replaced in its entirety by Schedule 2.01 (Second Amended) of this Agreement.

(d) Amendment to Schedule 10.02 (Amended) of the Original Agreement.
Schedule 10.02 (Amended) of the Original Agreement is replaced in its entirety by Schedule 10.02 (Second Amended) of this Agreement.

Sf-1451502 2. 364-Day Credit Agreement (2003)


3. Representations and Warranties. ------------------------------- The Company hereby represents and warrants to the Agent and the Banks as follows:

(a) No Default or Event of Default has occurred and is continuing (or would result from the amendment of the Original Agreement contemplated hereby).

(b) The execution, delivery and performance by the Company of this Agreement and the Original Agreement (as amended and restated by this Agreement) have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable.

(c) This Agreement, each Note delivered hereunder and the Original Agreement (as amended and restated by this Agreement) constitute the legal, valid and binding obligations of the Company, enforceable against it in accordance with their respective terms.

(d) All representations and warranties of the Company contained in the Original Agreement are true and correct (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date and except that this subsection (d) shall be deemed instead to refer to (x) the last day of the most recent quarter and year for which financial statements have then been delivered;
(y) to the most recent Form 10-K and Forms 10-Q filed subsequently thereto by the Company with the SEC, in respect of the representations and warranties made in Section 5.05 of the Original Agreement; and (z) to the most recent Form 10-K filed by the Company with the SEC, in respect of the representations and warranties made in Section 5.10(a) of the Original Agreement).

(e) There has occurred since January 31, 2002 (except as disclosed in any public filings since such date), no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(f) The Company is entering into this Agreement on the basis of its own investigation and for its own reasons, without reliance upon the Agent and the Banks or any other Person.

(g) The Company's obligations under the Original Agreement and under the other Loan Documents are not subject to any defense, counterclaim, set-off, right of recoupment, abatement or other claim.

4. Conditions of Effectiveness.

(a) The effectiveness of Section 2 of this Agreement shall be subject to the satisfaction of each of the following conditions precedent:

(1) The Agent shall have received from the Company and each of the Banks (i) a duly executed original (or, if elected by the Agent, an executed facsimile copy) of this Agreement; and (ii) if requested by any Bank, a Note (or replacement Note) substantially in the form of Exhibit I to the Original Agreement.

Sf-1451502 3. 364-Day Credit Agreement (2003)


(2) The Agent shall have received evidence of payment by the Company of all fees, costs and expenses due and payable as of the Effective Date hereunder and under the Original Agreement, including any costs and expenses payable under Section 7(g) of this Agreement (including the Agent's Attorney Costs, to the extent invoiced on or prior to the Effective Date).

(3) The Agent shall have received from the Company a copy of the resolutions passed by the board of directors of the Company, certified as of the Effective Date by the Secretary or an Assistant Secretary of such Person, authorizing the execution, delivery and performance of this Agreement, the Notes to be delivered hereunder and the Original Agreement (as amended and restated by this Agreement).

(4) The Agent shall have received an opinion of John R. Sims, Executive Vice President and General Counsel to the Company, dated the Effective Date and addressed to the Agent and the Banks, in form and substance satisfactory to the Agent and each Bank.

(5) The Agent shall have received a favorable opinion of Morrison & Foerster LLP, special counsel to the Agent, in form and substance satisfactory to the Agent and each Bank, dated the Effective Date.

(6) The Agent shall have received all other documents it or any Bank may reasonably request relating to any matters relevant hereto, all in form and substance satisfactory to the Agent and each Bank.

(7) The representations and warranties in Section 3 of this Agreement shall be true and correct on and as of the Effective Date with the same effect as if made on and as of the Effective Date.

(b) For purposes of determining compliance with the conditions specified in
Section 4(a), each Bank that has executed this Agreement shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter either sent, or made available for inspection, by the Agent to such Bank for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Bank.

(c) From and after the Effective Date, the Original Agreement is amended as set forth herein and is restated in its entirety to read as set forth in the Original Agreement with the amendments specified herein, and all outstanding Notes under the Original Agreement shall be superseded and replaced by the Notes delivered under this Agreement. All such previously outstanding Notes will be deemed cancelled upon the occurrence of the Effective Date. The Original Agreement (as amended and restated by this Agreement) is hereby ratified and confirmed in all respects.

(d) The Agent will notify the Company and the Banks of the occurrence of the Effective Date.

Sf-1451502 4. 364-Day Credit Agreement (2003)


5. Fees. ----- At Closing, the Company shall pay to the Agent for itself the fees set forth in the Fee Letter dated as of January 27, 2003 by and between the Company, the Lead Arranger and the Agent.

6. Certain Transitional Matters. ----------------------------- On the Effective Date, the Banks party to the Original Agreement, as amended and restated hereby, shall be the Banks listed on the signature pages hereof and shall have the respective Commitments in the amounts set forth in Schedule 2.01 (Second Amended) of this Agreement. Without limiting the generality of the foregoing, on the Effective Date, any Banks party to the Original Agreement not listed on the signature pages hereof shall cease to be parties to the Original Agreement, and each new Bank listed on the signature pages hereof not previously party to the Original Agreement shall be and become a party to the Original Agreement and shall have all of the rights and be obligated to perform all of the obligations of a Bank thereunder with a Commitment in the amount set forth opposite such Bank's name in Schedule 2.01 (Second Amended) of this Agreement.

7. Miscellaneous.
(a) The Company acknowledges and agrees that the execution and delivery by the Agent and the Banks of this Agreement shall not be deemed to create a course of dealing or an obligation to execute similar amendments or provide any waivers or other amendments under the same or similar circumstances in the future.

(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns.

(c) This Agreement shall be governed by and construed in accordance with the law of the State of New York; provided that the Agent and the Banks shall retain all rights arising under Federal law.

(d) This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Agent of a facsimile transmitted document purportedly bearing the signature of a Bank or the Company shall bind such Bank or the Company, respectively, with the same force and effect as the delivery of a hard copy original. Any failure by the Agent to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Agent.

(e) This Agreement contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein. This Agreement supersedes all prior drafts and communications with respect hereto. This Agreement may not be amended except in accordance with the provisions of Section 10.01 of the Original Agreement.

Sf-1451502 5. 364-Day Credit Agreement (2003)


(f) If any term or provision of this Agreement shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Agreement, the Original Agreement or the Loan Documents.

(g) The Company agrees to pay or reimburse BofA (including in its capacity as Agent), upon demand, for all reasonable costs and expenses (including reasonable Attorney Costs) incurred by BofA (including in its capacity as Agent) in connection with the development, preparation, negotiation, execution and delivery of this Agreement.

[Signature pages follow]

Sf-1451502 6. 364-Day Credit Agreement (2003)


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

ALBERTSON'S, INC.

By:     /s/ John F. Boyd
        ---------------------------------
Name:   John F. Boyd

Title:  Group Vice President & Treasurer

Sf-1451502 S-1 364-Day Credit Agreement (2003)


BANK OF AMERICA, N.A., as
Administrative Agent and as a Bank

By:     /s/ Dan M. Killian
        ---------------------------------
Name:   Dan M. Killian

Title:  Managing Director

Sf-1451502 S-2 364-Day Credit Agreement (2003)


BANK ONE, NA as Syndication Agent and as a Bank

By:     /s/ Steven P. Sullivan
        ---------------------------------
Name:   Steven P. Sullivan

Title:  Director

Sf-1451502 S-3 364-Day Credit Agreement (2003)


UNION BANK OF CALIFORNIA, N.A.
as Documentation Agent and as a Bank

By:     /s/ Timothy P. Streb
        ---------------------------------
Name:   Timothy P. Streb

Title:  Vice President

Sf-1451502 S-4 364-Day Credit Agreement (2003)


WELLS FARGO BANK, N.A.
as Documentation Agent and as a Bank

By:     /s/ Mary G. Monroe
        ---------------------------------
Name:   Mary G. Monroe

Title:  Vice President

Sf-1451502 S-5 364-Day Credit Agreement (2003)


BANK OF OKLAHOMA, N.A.

By:     /s/ Jane Faulkenberry
        ---------------------------------
Name:   Jane Faulkenberry

Title:  Senior Vice President

Sf-1451502 S-6 364-Day Credit Agreement (2003)


COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH


By:     /s/ Ian Reece
        ---------------------------------
Name:   Ian Reece

Title:  Managing Director




By:     /s/ Jessalyn Peters
        ---------------------------------
Name:   Jessalyn Peters

Title:  Executive Director

Sf-1451502 S-7 364-Day Credit Agreement (2003)


CREDIT SUISSE FIRST BOSTON
CAYMAN ISLANDS BRANCH

By:     /s/ Bill O'Daly
        ---------------------------------
Name:   Bill O'Daly

Title:  Director



By:     /s/ Cassandra Droogan
        ---------------------------------
Name:   Cassandra Droogan

Title:  Associate

Sf-1451502 S-8 364-Day Credit Agreement (2003)


KEYBANK NATIONAL ASSOCIATION

By:     /s/ Cheryl L. Ebner
        ---------------------------------
Name:   Cheryl L. Ebner

Title:  Senior Vice President

Sf-1451502 S-9 364-Day Credit Agreement (2003)


MERRILL LYNCH BANK USA

By:     /s/ Louis Alder
        ---------------------------------
Name:   Louis Alder

Title:  Vice President

Sf-1451502 S-10 364-Day Credit Agreement (2003)


THE BANK OF NEW YORK

By:     /s/ Randolph E. J. Medrano
        ---------------------------------
Name:   Randolph E. J. Medrano

Title:  Vice President

Sf-1451502 S-11 364-Day Credit Agreement (2003)


THE BANK OF NOVA SCOTIA

By:     /s/ Daryl Hogge
        ---------------------------------
Name:   Daryl Hogge

Title:  Director

Sf-1451502 S-12 364-Day Credit Agreement (2003)


THE NORTHERN TRUST COMPANY

By:     /s/ Melissa A. Whitson
        ---------------------------------
Name:   Melissa A. Whitson

Title:  Vice President

Sf-1451502 S-13 364-Day Credit Agreement (2003)


TCF NATIONAL BANK

By:     /s/ Russell P. McMinn
        ---------------------------------
Name:   Russell P.McMinn

Title:  Senior Vice President

Sf-1451502 S-14 364-Day Credit Agreement (2003)


UMB BANK, N.A.

By:     /s/ David A. Proffitt
        ---------------------------------
Name:   David A. Proffitt

Title:  Senior Vice President

Sf-1451502 S-15 364-Day Credit Agreement (2003)


WACHOVIA BANK, NATIONAL
ASSOCIATION

By:     /s/ Anthony D. Braxton
        ---------------------------------
Name:   Anthony D. Braxton

Title:  Director

Sf-1451502 S-16 364-Day Credit Agreement (2003)


SCHEDULE 2.01 (SECOND AMENDED)

COMMITMENTS
AND PRO RATA SHARES

BANK                                                                        COMMITMENT                      PRO RATA
                                                                                                              SHARE
--------------------------------------------------------------------      --------------                  -------------

                                                                          $50,000,000.00                  14.285714286%
BANK OF AMERICA, N.A.
                                                                           45,000,000.00                  12.857142857%
BANK ONE, NA
                                                                           40,000,000.00                  11.428571429%
UNION BANK OF CALIFORNIA, N.A.
                                                                           40,000,000.00                  11.428571429%
WELLS FARGO BANK, N.A.
                                                                           25,000,000.00                   7.142857143%
MERRILL LYNCH BANK USA
                                                                           20,000,000.00                   5.714285714%
THE NORTHERN TRUST COMPANY
                                                                           20,000,000.00                   5.714285714%
KEYBANK NATIONAL ASSOCIATION
                                                                           20,000,000.00                   5.714285714%
THE BANK OF NOVA SCOTIA
                                                                           20,000,000.00                   5.714285714%
CREDIT SUISSE FIRST BOSTON
                                                                           20,000,000.00                   5.714285714%
RABOBANK INTERNATIONAL
                                                                           15,000,000.00                   4.285714286%
TCF NATIONAL BANK
                                                                           10,000,000.00                   2.857142857%
UMB BANK, N.A.
                                                                           10,000,000.00                   2.857142857%
BANK OF OKLAHOMA, N.A.
                                                                           10,000,000.00                   2.857142857%
THE BANK OF NEW YORK
                                                                            5,000,000.00                   1.428571429%
WACHOVIA BANK, NATIONAL ASSOCIATION



                                    TOTAL                                $350,000,000.00                100.000000000%*

* [9 DECIMAL PTS.]

sf-1451502 S-2.01 (Second Amended)-1 364-Day Credit Agreement (2003)


SCHEDULE 10.02 (SECOND AMENDED)

PAYMENT OFFICES; ADDRESSES FOR NOTICES; LENDING
OFFICES

COMPANY

Address for Notices:

Albertson's, Inc.
250 Parkcenter Blvd.
Box 20
Boise, Idaho 83726

Attention:      Finance Department
Telephone:      (208) 395-6534
Facsimile:      (208) 395-6631

BANK OF AMERICA, N.A., as Agent

Notices for Borrowing, Conversions/Continuations, and Payments:

Bank of America, N.A.
Mail Code: CA4-706-05-09
Agency Services #5596
1850 Gateway Boulevard, 5th Floor
Concord, California 94520

Attention:      Glenis Croucher, Credit Services Representative
Telephone:      (925) 675-8382
Facsimile:      (888) 969-3315

Other Notices:

Bank of America, N.A.
Mail Code: TX1-492-14-11
901 Main Street, 14th Floor
Dallas, TX 75202
Attention: Jennifer Reeves, Agency Management Officer II

Telephone:        (214) 209-4125
Facsimile:        (214) 290-9507

sf-1451502        S-10.02 (Second Amended)-1     364-Day Credit Agreement (2003)


with a copy to:

Bank of America, N.A.
Portfolio Management - Retail Group
Mail Code: TX1-492-66-01
901 Main Street, 64th Floor
Dallas, TX 75202

Attention:      Daniel M. Killian, Managing Director
Telephone:      (214) 209-0978
Facsimile:      (214) 209-0905

Agent's Payment Office:

Bank of America, N.A.
ABA No. 111000012
Attention: Agency Administrative Services Unit #5596 Reference: Albertson's, Inc.
For credit to Acct. No. 37508-36479

BANK OF AMERICA, N.A., as a Bank

Domestic and Offshore Lending Office:
(Borrowing Notices, Notices of Conversion/Continuation and Payments)

Bank of America, N.A.
Mail Code: CA4-706-05-09
Agency Services #5596
1850 Gateway Boulevard, 5th Floor
Concord, California 94520

Attention:      Glenis Croucher, Credit Services Representative
Telephone:      (925) 675-8382
Facsimile:      (888) 969-3315

All other Notices:

Bank of America, N.A.
Portfolio Management - Retail Group
Mail Code: TX1-492-66-01
901 Main Street, 64th Floor
Dallas, TX 75202

Attention:      Daniel M. Killian, Managing Director
Telephone:      (214) 209-0978
Facsimile:      (214) 209-0905

sf-1451502 S-10.02 (Second Amended)-2 364-Day Credit Agreement (2003)


BANK ONE, NA, as Syndication Agent and as a Bank

Domestic and Offshore Lending Office:

Bank One, NA
1 Bank One Plaza
IL1-0088
Chicago, Illinois 60670

Attention:        Angela Watson
Telephone:        (312) 732-4398
Facsimile:        (312) 732-2715

Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

Bank One, NA
1 Bank One Plaza
IL1-0086
Chicago, Illinois 60670

Attention:        Paul E. Rigby, Senior Vice President
Telephone:        (312) 732-6132
Facsimile:        (312) 336-4380

UNION BANK OF CALIFORNIA, N.A., as Documentation Agent and as a Bank

Domestic and Offshore Lending Office:

Union Bank of California, N.A.
Commercial Customer Service Unit
1980 Saturn Street
Monterey Park, California 91755

Attention:        Ruby Gonzales
Telephone:        (323) 720-7055
Facsimile:        (323) 724-6198

Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

Union Bank of California, N.A.
350 California Street, 9th Floor
San Francisco, California 94104

Attention:        Timothy P. Streb, Vice President
Telephone:        (415) 705-7021
Facsimile:        (415) 705-5085

sf-1451502 S-10.02 (Second Amended)-3 364-Day Credit Agreement (2003)


WELLS FARGO BANK, N.A., as Documentation Agent and as a Bank

Domestic and Offshore Lending Office:

Wells Fargo Bank, N.A.
201 Third Street
MAC A0187-081
San Francisco, California 94103

Attention:        Ginnie Padgett
Telephone:        (415) 477-5374
Facsimile:        (415) 512-1943

Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

Wells Fargo Bank, N.A.
P.O. Box 7069
MAC U1801-040
Boise, Idaho 94103

Attention:        Mary G. Monroe, Vice President & Sr. Relationship Manager
Telephone:        (208) 393-2106
Facsimile:        (208) 393-2472

Secondary Contact:

Wells Fargo Bank, N.A.
1300 SW 5th Ave.
MAC P6101-076
Portland, OR 97201

Attention:        Lisa Larpenteur, Assistant Vice President
Telephone:        (503) 886-2216
Facsimile:        (503) 886-2211

BANK OF OKLAHOMA, N.A.

Domestic and Offshore Lending Office:

Bank of Oklahoma, N.A.
One Williams Center 84
Tulsa, Oklahoma 74172

Attention:        Sharon Shannon
Telephone:        (918) 588-6335
Facsimile:        (918) 280-3368


sf-1451502        S-10.02 (Second Amended)-4     364-Day Credit Agreement (2003)


Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

Bank of Oklahoma, N.A.
P.O. Box 2300
Tulsa, Oklahoma 74192

Attention:        Jane Faulkenberry, Senior Vice President
Telephone:        (918) 588-6272
Facsimile:        (918) 280-3368

COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH

Domestic and Offshore Lending Office:

Rabobank International
10 Exchange Place, 16th Floor
Jersey City, New Jersey 07302

Attention:        Clemencia Stewart
Telephone:        (201) 499-5245
Facsimile:        (201) 499-5328

Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

Rabobank International
4 Embarcadero Center, Suite 3200
San Francisco, California 94111

Attention:        John J. McHugh, Vice President
Telephone:        (415) 782-9810
Facsimile:        (415) 986-8349

CREDIT SUISSE FIRST BOSTON CAYMAN ISLANDS BRANCH

Domestic and Offshore Lending Office:

Credit Suisse First Boston Cayman Islands Branch Eleven Madison Avenue
New York, New York 10010

Attention:        Edward Markowski
Telephone:        (212) 538-3380
Facsimile:        (212) 538-6851


sf-1451502        S-10.02 (Second Amended)-5     364-Day Credit Agreement (2003)


Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

Credit Suisse First Boston Cayman Islands Branch Eleven Madison Avenue
New York, New York 10010

Attention:        William O'Daly
Telephone:        (212) 325-1986
Facsimile:        (212) 743-2254

KEYBANK NATIONAL ASSOCIATION

Domestic and Offshore Lending Office:

KeyBank National Association
431 E. Parkcenter Blvd.
Boise, ID 83706

Attention:        Western Loan Services, Specialty Services
Telephone:        (800) 297-5518
Facsimile:        (800) 297-5495

Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

KeyBank National Association
601 108th Avenue, N.E., 5th Floor
Mailstop: WA-31-18-0512
Bellevue, WA 98004

Attention:        Keven D. Smith, Portfolio Manager
Telephone:        (425) 709-4579
Facsimile:        (425) 709-4587

MERRILL LYNCH BANK USA

Domestic and Offshore Lending Office:

Merrill Lynch Bank USA
15 W. South Temple
Suite 300
Salt Lake City, UT 84101

Attention:        Frank Stepan
Telephone:        (801) 526-8316
Facsimile:        (801) 359-4667


sf-1451502        S-10.02 (Second Amended)-6     364-Day Credit Agreement (2003)


Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

Merrill Lynch Bank USA
15 W. South Temple, Suite 300
Salt Lake City, UT 84101

Attention:        Butch Alder, VP - Corp. Lending Officer
Telephone:        (801) 526-8324
Facsimile:        (801) 531-7470

THE BANK OF NEW YORK

Domestic and Offshore Lending Office:

The Bank of New York
One Wall Street, 8th Floor
New York, New York 10286

Attention:        Diane Burgess
Telephone:        (212) 635-1311
Facsimile:        (212) 635-1481

Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

The Bank of New York
One Wall Street, 8th Floor
New York, New York 10286

Attention:        Randolph E.J. Medrano, Vice President
Telephone:        (212) 635-6804
Facsimile:        (212) 635-1483

THE BANK OF NOVA SCOTIA

Domestic and Offshore Lending Office:

The Bank of Nova Scotia
600 Peachtree Street, N.E. #2700
Atlanta, Georgia 30308

Attention:        Lily Hsieh
Telephone:        (404) 877-1523
Facsimile:        (404) 888-8998


sf-1451502        S-10.02 (Second Amended)-7     364-Day Credit Agreement (2003)


Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

The Bank of Nova Scotia
888 S.W. 5th Avenue
Portland, Oregon 97204

Attention:        Daryl Hogge
Telephone:        (503) 222-4169
Facsimile:        (503) 222-5502

THE NORTHERN TRUST COMPANY

Domestic and Offshore Lending Office:

The Northern Trust Company
50 South LaSalle
Chicago, Illinois 60675

Attention:        Linda Honda
Telephone:        (312) 444-3532
Facsimile:        (312) 630-1566

Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

The Northern Trust Company
50 South LaSalle
Chicago, Illinois 60675

Attention:        Melissa A. Whitson
Telephone:        (312) 444-4473
Facsimile:        (312) 630-6062

TCF NATIONAL BANK

Domestic and Offshore Lending Office:

TCF National Bank
500 W. Brown Deer Road
P.O. Box 170995
Milwaukee, WI 53217-8096
Attention: Sue Binder
Telephone: (414)351-8657
Facsimile: (414) 351-8694

sf-1451502 S-10.02 (Second Amended)-8 364-Day Credit Agreement (2003)


Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

TCF National Bank
500 W. Brown Deer Road
P.O. Box 170995 Milwaukee, WI 53217-8096

Attention:        Russell P. McMinn, Senior Vice President
Telephone:        (414) 351-8383
Facsimile:        (414) 351-8680

UMB BANK, N.A.

Domestic and Offshore Lending Office:

UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri 64106

Attention:        Vaughnda Ritchie
Telephone:        (816) 860-7019
Facsimile:        (816) 860-7796

Notices (other than Borrowing Notices and Notices of Conversion/Continuation):

UMB Bank, n.a.
1010 Grand Boulevard
Kansas City, Missouri 64106

Attention:        David A. Proffitt, Senior Vice President
Telephone:        (816) 860-7935
Facsimile:        (816) 860-7143

WACHOVIA BANK, NATIONAL ASSOCIATION

Domestic and Offshore Lending Office:

Wachovia Bank, National Association
201 So. College St.
CP-17
Charlotte, NC 28288

Attention:        Todd Tucker
Telephone:        (704) 383-0905
Facsimile:        (704) 383-7999


sf-1451502        S-10.02(Second Amended)-9      364-Day Credit Agreement (2003)


Notices (other than Borrowing Notice and Notices of Conversion/Continuation):

Wachovia Bank, National Association
1339 Chestnut Street
Philadelphia, PA 19107

Attention:        Anthony Braxton, Director
Telephone:        (267) 321-6606
Facsimile:        (267) 321-6700


sf-1451502        S-10.02 (Second Amended)-10    364-Day Credit Agreement (2003)


EXHIBIT 10.29.1

Execution Version

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

This FIRST AMENDMENT TO Amended and Restated Credit Agreement (this "Amendment") is entered into as of February 19, 2004, among Albertson's, Inc., a Delaware corporation (the "Company"), the several financial institutions party to this Amendment (individually, a "Bank" and, collectively, the "Banks"), Bank One, NA, as syndication agent (in such capacity, the "Syndication Agent"), Union Bank of California, N.A. and Wells Fargo Bank, N.A., as documentation agents (in such capacity, the "Documentation Agents") and Bank of America, N.A., as administrative agent for itself and the Banks (in such capacity, the "Agent").

WHEREAS, the Company, the Banks party thereto and the Agent entered into a Credit Agreement dated as of March 22, 2000, as amended and restated as of March 15, 2001, as amended and restated as of March 13, 2002, as further modified by certain consents effective as of June 14, 2002 and July 5, 2002, respectively, and as amended and restated as of March 7, 2003 (as in effect as of the date of this Amendment, the "Credit Agreement") providing for a 364-day revolving credit facility; and

WHEREAS, the parties hereto desire to amend the Credit Agreement subject to the terms and conditions of this Amendment;

NOW, THEREFORE, the parties hereto agree as follows:

1. Definitions; References; Interpretation.

(a) Unless otherwise specifically defined herein, each term used herein (including in the Recitals hereof) which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement.

(b) Each reference to "this Amendment", "hereof", "hereunder", "herein" and "hereby" and each other similar reference contained in the Credit Agreement, and each reference to "the Credit Agreement" and each other similar reference in the other Loan Documents, shall from and after the Effective Date (as defined in subsection 2) refer to the Credit Agreement as amended and restated hereby.

(c) The rules of interpretation set forth in Section 1.02 of the Credit Agreement shall be applicable to this Amendment.

2. Amendments to Credit Agreement. Subject to the terms and conditions hereof, the Credit Agreement is amended as follows, effective as of the date of satisfaction of the conditions set forth in Section 4 (the "Effective Date"):

(a) Amendments to Article I of the Credit Agreement.

(1) The definition of "Revolving Termination Date" is amended in its entirety to provide as follows: "Revolving Termination Date" means the earlier to occur of:


(a) July 31, 2004, as the same may be extended from time to time pursuant to Section 2.16; and

(b) the date on which the Commitments terminate in accordance with the provisions of this Agreement.

(2) The defined term, "Company's 2001 Form 10-K" shall be deleted, and a new defined term, "Company's 2002 Form 10-K" shall be added as follows:

"Company's 2002 Form 10-K" means the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2003, as filed with the SEC pursuant to the Exchange Act.

Accordingly, each reference to "Company's 2001 Form 10-K" in the Credit Agreement shall be deemed to refer to "Company's 2002 Form 10-K," and each reference to January 31, 2002 in Sections 1.01, 4.02 and 5.10 of the Credit Agreement shall be deemed to refer to January 30, 2003.

(b) Amendments to Article V of the Credit Agreement. The two references to "October 31, 2002" in Section 5.10(b) of the Credit Agreement shall be deleted and replaced by "October 30, 2003" for each such reference.

(c) Amendments to Article VI of the Credit Agreement. The following paragraph shall be added to the end of Section 6.01 of the Credit Agreement:

Documents required to be delivered pursuant to Section 6.01(a) or
(b) or Section 6.01(f) or (g) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto on the Company's website on the internet at http://www.albertsons.com; or (ii) on which such documents are posted on the Company's behalf on an internet or intranet website, if any, to which each Bank and the Agent have access (whether a commercial, third-party website or whether sponsored by the Agent); provided that:
(x) the Company shall deliver paper copies of such documents to the Agent or any Bank that requests the Company to deliver such paper copies until a written request to cease delivering paper copies is given by the Agent or such Bank and (y) the Company shall notify (which may be by facsimile or electronic mail) the Agent and each Bank of the posting of any such documents and provide to the Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Company shall be required to provide paper copies of the Compliance Certificates required by Section 6.01(c) to the Agent. Except for such Compliance Certificates, the Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Company with any such request for delivery, and each Bank shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. Notwithstanding anything to the contrary in Section 10.05, no Indemnified Person shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement.

sf-1625869 2.


3. Representations and Warranties. The Company hereby represents and warrants to the Agent and the Banks as follows:

(a) No Default or Event of Default has occurred and is continuing (or would result from the amendment of the Credit Agreement contemplated hereby).

(b) The execution, delivery and performance by the Company of this Amendment and the Credit Agreement (as amended by this Amendment) have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable.

(c) This Amendment and the Credit Agreement (as amended by this Amendment) constitute the legal, valid and binding obligations of the Company, enforceable against it in accordance with their respective terms.

(d) All representations and warranties of the Company contained in the Credit Agreement are true and correct (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date and except that this subsection (d) shall be deemed instead to refer to (x) the last day of the most recent quarter and year for which financial statements have then been delivered; (y) to the most recent Form 10-K and Forms 10-Q filed subsequently thereto by the Company with the SEC, in respect of the representations and warranties made in Section 5.05 of the Credit Agreement; and (z) to the most recent Form 10-K filed by the Company with the SEC, in respect of the representations and warranties made in
Section 5.10(a) of the Credit Agreement).

(e) There has occurred since January 30, 2003 (except as disclosed in any public filings since such date), no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(f) The Company is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Agent and the Banks or any other Person.

(g) The Company's obligations under the Credit Agreement and under the other Loan Documents are not subject to any defense, counterclaim, set-off, right of recoupment, abatement or other claim.

4. Conditions of Effectiveness.

(a) The effectiveness of Section 2 of this Amendment shall be subject to the satisfaction of each of the following conditions precedent:

sf-1625869 3.


(1) The Agent shall have received from the Company and each of the Banks a duly executed original (or, if elected by the Agent, an executed facsimile copy) of this Amendment.

(2) The Agent shall have received evidence of payment by the Company of all fees, costs and expenses due and payable as of the Effective Date hereunder and under the Credit Agreement, including such fees payable to the Banks as separately agreed, and any costs and expenses payable under
Section 5(g) of this Amendment (including the Agent's Attorney Costs, to the extent invoiced on or prior to the Effective Date).

(3) The Agent shall have received from the Company a certificate of the Secretary or Assistant Secretary of the Company, dated as of the Effective Date, stating that the copy of the resolutions adopted by the board of directors of the Company on December 6, 2000 and attached to the certificate of the Secretary of the Company delivered in connection with the Credit Agreement have not been amended and remain in full force and effect.

(4) The Agent shall have received all other documents it or any Bank may reasonably request relating to any matters relevant hereto, all in form and substance satisfactory to the Agent and each Bank.

(5) The representations and warranties in Section 3 of this Amendment shall be true and correct on and as of the Effective Date with the same effect as if made on and as of the Effective Date.

(b) For purposes of determining compliance with the conditions specified in
Section 4(a), each Bank that has executed this Amendment shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter either sent, or made available for inspection, by the Agent to such Bank for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Bank.

(c) From and after the Effective Date, the Credit Agreement is amended as set forth herein. The Credit Agreement (as amended by this Amendment) is hereby ratified and confirmed in all respects.

(d) The Agent will notify the Company and the Banks of the occurrence of the Effective Date.

5. Miscellaneous.

(a) The Company acknowledges and agrees that the execution and delivery by the Agent and the Banks of this Amendment shall not be deemed to create a course of dealing or an obligation to execute similar amendments or provide any waivers or other amendments under the same or similar circumstances in the future.

(b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns.

sf-1625869 4.


(c) This Amendment shall be governed by and construed in accordance with the law of the State of New York; provided that the Agent and the Banks shall retain all rights arising under Federal law.

(d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Agent of a facsimile transmitted document purportedly bearing the signature of a Bank or the Company shall bind such Bank or the Company, respectively, with the same force and effect as the delivery of a hard copy original. Any failure by the Agent to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Agent.

(e) This Amendment contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein. This Amendment supersedes all prior drafts and communications with respect hereto. This Amendment may not be amended except in accordance with the provisions of Section 10.01 of the Credit Agreement.

(f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment, the Credit Agreement or the Loan Documents.

(g) The Company agrees to pay or reimburse BofA (including in its capacity as Agent), upon demand, for all reasonable costs and expenses (including reasonable Attorney Costs) incurred by BofA (including in its capacity as Agent) in connection with the development, preparation, negotiation, execution and delivery of this Amendment.

[Signature pages follow]

sf-1625869 5.


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

ALBERTSON'S, INC.

By:     /s/ John F. Boyd
        ---------------------------------
Name:   John F. Boyd

Title:  Group Vice President & Treasurer

sf-1625869 S-1


BANK OF AMERICA, N.A., as
Agent and as a Bank

By:     /s/ Dan M. Killian
        ---------------------------------
Name:   Dan M. Killian

Title:  Managing Director

sf-1625869 S-2


BANK ONE, NA as Syndication Agent and as a Bank

By:     /s/ Steven P. Sullivan
        ---------------------------------
Name:   Steven P. Sullivan

Title:  Director

sf-1625869 S-3


UNION BANK OF CALIFORNIA, N.A.
as Documentation Agent and as a Bank

By:     /s/ Timothy P. Streb
        ---------------------------------
Name:   Timothy P. Streb

Title:  Senior Vice President

sf-1625869 S-4


WELLS FARGO BANK, N.A.
as Documentation Agent and as a Bank

By:     /s/ Steven J. Anderson
        ---------------------------------
Name:   Steven J. Anderson

Title:  Senior Vice President

sf-1625869 S-5


BANK OF OKLAHOMA, N.A.

By:     /s/ Jane Faulkenberry
        ---------------------------------
Name:   Jane Faulkenberry

Title:  Senior Vice President

sf-1625869 S-6


COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH


By:     /s/ John J. McHugh
        ---------------------------------
Name:   John J. McHugh

Title:  Executive Director




By:     /s/ Rebecca O. Morrow
        ---------------------------------
Name:   Rebecca O. Morrow

Title:  Executive Director

sf-1625869 S-7


CREDIT SUISSE FIRST BOSTON
CAYMAN ISLANDS BRANCH

By:     /s/ Bill O'Daly
        ---------------------------------
Name:   Bill O'Daly

Title:  Director



By:     /s/ Cassandra Droogan
        ---------------------------------
Name:   Cassandra Droogan

Title:  Associate

sf-1625869 S-8


KEYBANK NATIONAL ASSOCIATION

By:     /s/ Michael J. Vegh
        ---------------------------------
Name:   Michael J. Vegh

Title:  Portfolio Manager

sf-1625869 S-9


MERRILL LYNCH BANK USA

By:     /s/ Louis Alder
        ---------------------------------
Name:   Louis Alder

Title:  Director

sf-1625869 S-10


THE BANK OF NEW YORK

By:     /s/ Randolph E. J. Medrano
        ---------------------------------
Name:   Randolph E. J. Medrano

Title:  Vice President

sf-1625869 S-11


THE BANK OF NOVA SCOTIA

By:     /s/ Patrick G. Nome
        ---------------------------------
Name:   Patrick G. Nome

Title:  Director

sf-1625869 S-12


THE NORTHERN TRUST COMPANY

By:     /s/ John P. Brazzale
        ---------------------------------
Name:   John P. Brazzale

Title:  Vice President

sf-1625869 S-13


TCF NATIONAL BANK

By:     /s/ Judith L. Alligood
        ---------------------------------
Name:   Judith L. Alligood

Title:  Vice President

sf-1625869 S-14


UMB BANK, N.A.

By:     /s/ David A. Proffitt
        ---------------------------------
Name:   David A. Proffitt

Title:  Senior Vice President

sf-1625869 S-15


WACHOVIA BANK, NATIONAL ASSOCIATION

By:     /s/ Anthony D. Braxton
        ---------------------------------
Name:   Anthony D. Braxton

Title:  Director

sf-1625869 S-16


EXHIBIT 10.10.4

FIFTH AMENDMENT
TO
ALBERTSONS 2000 DEFERRED COMPENSATION PLAN

WHEREAS, the Albertson's, Inc. 2000 Deferred Compensation Plan (the Plan") was established effective January 1, 2000, and has previously been amended;

WHEREAS, Albertson's, Inc. desires to further amend the Plan to change the name of the Plan and to limit the Moody's Rate of Return with respect to deferrals made after December 31, 2003;

NOW, THEREFORE, the following amendments to the Plan are hereby adopted:

1. Section 1.23 of the Plan is amended and restated, effective January 1, 2003, to read in its entirety as follows:

1.23 "Plan" means the Albertsons 2000 Deferred Compensation Plan as set forth herein, as amended from time to time.

2. Sections 5.3 of the Plan is amended, effective January 1, 2004, to add new subsections 5.3(e) and (f), to read in their entirety as follows:
...
(e) Notwithstanding the foregoing to the contrary, with respect to Deferred Amounts deferred under the Plan after December 31, 2003, each month, during the Participant's employment with the Employer, the balance of such Participant's Account shall be credited with a Rate of Return at the Moody's Rate without regard to when benefits first become distributable or the occurrence of a Change in Control.

(f) Notwithstanding the forgoing to the contrary, with respect to Deferred Amounts deferred under the Plan after December 31, 2003, each month, commencing on the first day the Participant ceases to be employed by the Employer and continuing until the earlier of the Participant's reemployment with the Employer or the complete distribution of the Participant's Account, the balance of the Participant's Account shall be credited with a Rate of Return equal to the Moody's Rate without regard to when benefits first become distributable or the occurrence of a Change in Control.

IN WITNESS WHEREOF, the Employer has caused this instrument to be executed by its officer, duly authorized by its Board of Directors, this 22nd day of December, 2003.

ALBERTSON'S, INC.

By   /s/ John Sims
-------------------------------------------------
Its  Executive Vice President and General Counsel


EXHIBIT 10.49

CREDIT AGREEMENT

Dated Effective as of: February 13, 2004

Parties: ALBERTSON'S, INC. ("Borrower")

And: U.S. BANK NATIONAL ASSOCIATION ("Lender")

ARTICLE I
CERTAIN DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings:

"Access Laws" means the Americans With Disabilities Act of 1990; the Fair Housing Amendments Act of 1988; all other federal, state and local laws or ordinances related to disabled access; and all statutes, rules, regulations, ordinances, orders of governmental bodies and regulatory agencies and orders and decrees of any court adopted, enacted or issued with respect thereto; all as now existing or hereafter amended or adopted.

"Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise.

"Agreement" means this Credit Agreement.

"Attorney Costs" means and includes all reasonable fees and disbursements of any law firm or external counsel.

"Basis Points" means the mathematical expression of one percent expressed in terms of 100 basis points being equal to one percent.

"Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.

"Borrower" means Albertson's, Inc. a Delaware corporation.

"Borrower's Authorized Representative" means any one of those persons identified by Borrower to Lender on Exhibit F attached hereto and made part hereof and any other persons in writing from time to time.

"Borrowing Date" means any date on which a Revolving Advance occurs under Article III.

"Business Day" means a day that commercial banks are open for business in Boise, Idaho.

"Change of Control" means any person or group of persons (within the meaning of Section 13 or 14 of the Exchange Act) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under said Act) of 40% or more of the outstanding shares of common stock of Borrower; or, during any period of twelve consecutive calendar months, individuals who were directors of Borrower on the first day of such period shall cease to constitute a majority of the board of directors of Borrower.

"Closing Date" means February 13, 2004.

"Code" means the Internal Revenue Code of 1986.

"Commitment" means Lender's agreement to make loans under Section 3.1 and the agreement to issue Letters of Credit in its sole discretion under Section 4.1.

"Compliance Certificate" means a certificate substantially in the form of Exhibit E.

CREDIT AGREEMENT Page 1


"Consolidated Interest Expense" means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, all interest, premium payments, fees, charges and related expenses of Borrower and its Subsidiaries in connection with borrowed money or in connection with the deferred purchase price of assets, to the extent treated as interest in accordance with GAAP, net of interest income, and the portion of rent expense with respect to capitalized lease obligations that is treated as interest in accordance with GAAP, and any construction period interest paid and capitalized; but excluding amortization of discount and deferred debt expense as determined in accordance with GAAP.

"Consolidated Rental Expense" means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis the aggregate rental expense (including any contingent or percentage rental expense and any rent offsets, as applicable) of Borrower and its Subsidiaries on a consolidated basis for such period in respect of all rent obligations under all operating leases for rent or personal property minus any rental income of Borrower and its Subsidiaries on a consolidated basis for such period (including licensee related income from licensees operating on the store premises of Borrower and its Subsidiaries).

"Consolidated Subsidiaries" means at any date any Subsidiary or other Person the accounts of which would be consolidated with those of Borrower in its consolidated financial statements as of such date.

"Continuing Reimbursement Agreement for Letters of Credit" means the agreement substantially in the form of Exhibit C attached hereto and made part hereof.

"Default" means any Event of Default or any event which with the giving of notice or the passage of time, or both, if not cured, would constitute an Event of Default.

"Default Rate" means Lender's Prime Rate.

"EBITDAR" means, for any period, for Borrower and its Subsidiaries on a consolidated basis, an amount equal to (i) the sum of (a) net earnings before One Time Charges for such period, (b) all income taxes for such period, (c) Consolidated Interest Expense for such period, (d) depreciation and amortization expense for such period, and (e) Consolidated Rental Expense for such period, minus (ii) cash One Time Charges for such period.

"Environmental Laws" means all local, state or federal laws, rules, regulations, or ordinances pertaining to Hazardous Substances and environmental regulation, contamination or clean-up including, without limitation, the federal statutes commonly known as CERCLA and RCRA and all other federal or state lien or environmental clean-up statutes, all as now existing or hereafter amended or adopted.

"ERISA" means the Employee Retirement Income Security Act of 1974.

"ERISA Group" means Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with Borrower, are treated as a single employer under Section 414 of the Code.

"Exchange Act" means the Securities Exchange Act of 1934.

"Existing Credit Facilities" means the credit facilities described in Article II of this Agreement.

"Fixed Charge Coverage Ratio" means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) EBITDAR for the period of four fiscal quarters ending on such date to (b) Total Fixed Charges for the period of four fiscal quarters ending on such date.

"FRB" means the Board of Governors of the Federal Reserve System and any Governmental Authority succeeding to any of its principal functions.

"GAAP" means generally accepted accounting principles consistently applied. The definition of any accounting term used in this Agreement that is not specifically defined shall be the GAAP definition therefor.

"Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

"Hazardous Substances" means (a) any substance or material defined or designated as hazardous or toxic waste, hazardous or toxic material, or a hazardous, toxic or radioactive substance (or designated by any similar term) by or for purposes of any applicable Environmental Law; (b) asbestos and any substance or compound containing asbestos; and (c) any other hazardous, toxic or dangerous waste, substance or material, including but not limited to gasoline, crude oil, fuel oil, diesel oil, and any other related petroleum products.

CREDIT AGREEMENT Page 2


"Indebtedness" of any Person means, without duplication, (a) all indebtedness for borrowed money; (b) all obligations evidenced by notes, bonds, debentures or similar instruments; (c) all obligations issued, undertaken or assumed as the deferred purchase price of property or services; (d) all obligations with respect to capital leases (but not obligations with respect to operating leases); (e) all obligations of such Person to purchase securities or other property which arise out of or in connection with the sale of the same or substantially similar securities or property; (f) all non-contingent obligations (and, for purposes of Article X and definition of Material Indebtedness all contingent obligations) of such Person to reimburse any bank or other Person in respect of amounts paid under any Surety Instrument; (g) all indebtedness of others of the type referred to in clauses (a) through (f) secured by a Lien on any asset of such Person, whether or not such indebtedness is assumed by such Person; (h) all Guaranty Obligations of such Person in respect of indebtedness of others of the type referred to in clauses (a) through (f), and (i) all preferred stock of such Person redeemable at the option of the holder during the Facility Period. Insurance reserves, tax reserves and interest thereon, salaries payable, taxes payable, dividends payable, trade accounts payable arising in the ordinary course of business, deferred investment tax credits, deferred compensation, deferred rents payable under non-capital leases, benefits payable, unearned income and other similar liabilities shall not constitute "Indebtedness."

"Indebtedness Rating" means the long-term unsecured senior, non-credit enhanced debt rating of Borrower by Standard & Poor's Ratings Group or Moody's Investor Service Inc. (in the case of a split rating, the higher rating will apply, unless the split results in a difference of more than one rating, in which case the rating one rating below the highest rating will apply).

"Independent Auditor" has the meaning specified in subsection 9.1(a).

"L/C Agreement" means the Continuing Reimbursement Agreement for Letters of Credit dated January 7, 2003.

"L/C Termination Date" means February 11, 2005.

"Lender" means U.S. Bank National Association.

"Lender's Authorized Representative" means any vice president or assistant relationship manager in the Commercial Banking Department of Lender.

"LIBOR Rate" means the asking price per annum for U.S. Dollar denominated deposits in the London, England interbank market as such price is presented to Lender by Dow, Jones & Company through its Dow Jones Telerate, Inc. subsidiary or a similar quote reporting service.

"Lien" means with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

"Loan Documents" means this Agreement, the Notes, and all other documents and instruments attached hereto, referred to herein or heretofore, contemporaneously herewith or hereafter executed or delivered to Lender by any Person in connection with the indebtedness of Borrower to Lender hereunder.

"Loan Party" means each party hereto other than Lender.

"Loans" means the Revolving Loans under Article III and the Letters of Credit under Article IV.

"Margin Stock" means "margin stock" as such term is defined in Regulation T, U or X of the FRB.

"Markus-Stiftung Stock Agreement" means the agreement dated February 15, 1980, among Borrower, Theo Albrecht Stiftung (now known as Markus-Stiftung) and Theo Albrecht, as amended by the First Amendment thereto dated as of April 11, 1984, the Second Amendment thereto dated as of September 25, 1989, and the Third Amendment thereto dated as of December 5, 1994 and any successor agreement.

"Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, liabilities or financial condition of Borrower and its Consolidated Subsidiaries taken as a whole; (b) a material impairment of the ability of Borrower to perform under any Loan Document and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Borrower of any Loan Document.

"Material Indebtedness" means Indebtedness (other than the Loans) of Borrower and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate outstanding principal amount exceeding $30,000,000.

CREDIT AGREEMENT Page 3


"Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $30,000,000.

"Maximum Letter of Credit Amount" means $42,500,000.

"Maximum Revolving Loan Amount" means $100,000,000.

"Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA, to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period.

"Multi-Year Credit Agreement" means the Credit Agreement dated as of March 22, 2000, among Borrower and the other financial institutions party thereto, including Lender, providing for a five-year revolving credit facility.

"Note(s)" means the Revolving Note and the Continuing Reimbursement Agreement for Letters of Credit.

"Notice of Borrowing" means a notice in substantially the form of Exhibit B.

"Obligation" means all advances, debts, liabilities, obligations, covenants and duties arising under any Loan Document, owing by Borrower to any Bank, any Designated Bidder, the Agent or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising.

"One Time Charges" means unusual material charges or credits against earnings which Borrower separately discloses in the discussion of the "Results of Operations" (including but not limited to merger related charges, restructuring charges, gains or losses from the disposition of assets and accounting changes).

"Overnight Borrowing" means a short-term loan that must be repaid by Borrower on the Business Day following the Business Day in which it is borrowed.

"PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA.

"Person" means an individual or entity, including without limitation a corporation, general or limited partnership, limited liability company, trust, unincorporated association, government or government agency.

"Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.

"Prime Rate" means Lender's rate of interest publicly announced from time to time as its "Prime Rate."

"Responsible Officer" means, as to any Person, the chief executive officer, the chief financial officer, or the treasurer or the president of such Person, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer or the treasurer of such Person, or any other officer having substantially the same authority and responsibility.

"Revolving Loan Termination Date" means the earlier of February 11, 2005, and the date Lender demands payment in full of the then outstanding balance of the Revolving Note.

"Revolving Note" means the promissory note referred to in Section 3.3 hereafter.

"Subsidiary" of a Person means any corporation or other business entity of which more than 50% of the voting stock, membership interests or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of Borrower.

"Surety Instruments" means all letters of credit (including standby and commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds and similar instruments.

CREDIT AGREEMENT Page 4


"Swap Contracts" means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing.

"Total Fixed Charges" means, for any period, for Borrower and its Subsidiaries on a consolidated basis (a) Consolidated Interest Expense for such period and (b) Consolidated Rental Expense for such period.

"Unfunded Liability" means with respect to any Plan at any time, the amount (if any) by which (i) the present value of all benefits under such Plan exceeds
(ii) the fair market value of all Plan assets allocable to such benefits (excluding any accrued by unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

"USBTS-Hong Kong" means U.S. Bank Trade Services - Hong Kong.

"Wholly-Owned Consolidated Subsidiaries" means any Consolidated Subsidiary all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by Borrower.

ARTICLE II
EXISTING CREDIT FACILITIES

2.1 Documents. Borrower and Lender are parties to the following documents which relate to credit facilities ("Existing Credit Facilities").

2.1.1 Multi-Year Credit Agreement.

2.1.2 Continuing Reimbursement Agreement for Letters of Credit dated January 7, 2003.

ARTICLE III
REVOLVING LOANS

3.1 Maximum Amount. Subject to the terms and conditions of this Agreement, Lender agrees to make loans to Borrower from time to time on a revolving credit basis (each a "Revolving Advance", collectively, "Revolving Loans"), provided that the aggregate principal amount of outstanding Revolving Loans shall at no time exceed the Maximum Revolving Loan Amount. The availability of Revolving Advances shall terminate on the Revolving Loan Termination Date.

3.2 Use of Proceeds. Borrower shall use the proceeds of the Revolving Loans for short-term cash position management, working capital, and other lawful purposes.

3.3 Revolving Note. The Revolving Loans shall be evidenced by a promissory note executed by Borrower in the principal amount of $100,000,000.00 substantially in the form attached as Exhibit A ("Revolving Note"). The Revolving Loans shall be subject to all terms and conditions of the Revolving Note and of this Agreement.

3.4 Interest. Interest on the unpaid principal balance of the Revolving Note shall be due and payable at the times and at the rates set forth in the Revolving Note.

3.5 Principal Payments. The principal balance of the Revolving Note shall be due and payable on the date indicated on the Revolving Note or if none, the Revolving Loan Termination Date, subject to the option of Borrower as set forth hereafter in Section 3.9.

3.6 Additional Payments. In addition to the payments otherwise required on the Revolving Note, if at any time the outstanding principal balance of the Revolving Note exceeds the Maximum Revolving Loan Amount, Borrower shall pay to Lender on demand an amount equal to the amount by which such principal balance exceeds the Maximum Revolving Loan Amount.

3.7 Requests for Revolving Advances. Whenever Borrower wishes to request a Revolving Advance, Borrower shall give Lender notice thereof in accordance with the Notice of Borrowing.

CREDIT AGREEMENT Page 5


3.8 Overnight Borrowing. Of the Revolving Loans, Borrower may request a Revolving Advance of up to $100,000,000 (so long as the amount requested is available to be borrowed at the time of the request) for the purpose of an Overnight Borrowing.

3.8.1 Interest Rate for Overnight Borrowing. The applicable interest rate for Overnight Borrowing shall be as set forth in the Revolving Note.

3.8.2 Requests for Overnight Borrowing. Borrower must request an Overnight Borrowing between 9 a.m. and 3 p.m., Mountain Time, on a Business Day, by either telephonic or facsimile communication to Lender's Authorized Representative, originated or signed by Borrower's Authorized Representative.

3.9 Term Loan Option. Not fewer than five (5) days and not more than thirty
(30) days prior to the Revolving Loan Termination Date, Borrower may provide written notice to Lender that the Revolving Loans outstanding as of the Revolving Loan Termination Date shall be converted into a Term Loan. If such notice is given, Lender agrees, on the terms and conditions hereinafter set forth, to make a term loan ("Term Loan") to Borrower on the Revolving Loan Termination Date, in a principal amount up to but not exceeding the outstanding Revolving Loans. Any amount of Lender's Term Loan repaid may not be reborrowed. Any such term loan will not exceed one year, and the interest rate applicable thereto shall be a variable rate based upon the LIBOR Rate for one week, one month, three months, or six months, at the option of Borrower, plus 25 Basis Points, plus a percentage based upon Borrower's then current Indebtedness Rating as follows:

---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
       Indebtedness Ratings             A / A2           A- / A3        BBB+ / Baa1        BBB / Baa2        BBB- / Baa3
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
            Percentage                  .185%             .30%              .40%              .50%              .825%
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------

ARTICLE IV
LETTERS OF CREDIT

4.1 Maximum Amount of Credits. Subject to the terms and conditions of this Agreement, Lender in its sole discretion and at its sole option may issue one or more standby and/or commercial Letters of Credit for the account of Borrower (each a "Letter of Credit"), provided that the L/C Outstandings shall not exceed at any one time the Maximum Letter of Credit Amount.

4.2 Use of Letters of Credit. Borrower shall use the letters of credit to support performance bonds, to process import transactions, or for other lawful purposes.

4.3 L/C Agreement. Borrower has executed or will execute contemporaneously with this Agreement the L/C Agreement.

4.4 L/C Applications. Whenever Borrower wishes to request the issuance of a Letter of Credit, Borrower shall execute and deliver to Lender an application therefor in Lender's standard form, appropriately completed with all required information (an "L/C Application"). Each Letter of Credit shall be subject to all terms and conditions of this Agreement, the L/C Agreement, and the applicable L/C Application. In the event of any express conflict between the terms of this Agreement and of the L/C Agreement and the L/C Application, the terms of this Agreement shall control.

4.5 Expiry Date. No Letter of Credit shall be issued on or after the L/C Termination Date. Each Letter of Credit shall have an expiration date no later than 365 days after the L/C Termination Date. Drafts drawn under a Letter of Credit may be sight drafts or time drafts; provided, however, that no draft shall have a maturity date later than 365 days after the L/C Termination Date.

4.6 Reimbursement. Borrower hereby agrees to reimburse Lender an amount equal to the face amount of each draft drawn under each Letter of Credit in accordance with the terms of such Letter of Credit and the applicable L/C Agreement. Notwithstanding the terms of any L/C Agreement, in the event Borrower fails to pay Lender in accordance with the terms of any L/C Agreement, Borrower agrees to pay to Lender on demand interest on all amounts due under such Letter of Credit at the Default Rate.

4.7 Certain Fees. In addition to any other fees set forth herein, Borrower agrees to pay to Lender on demand:

4.7.1 With respect to each Letter of Credit and each draft drawn thereunder, Lender's customary issuance fees, processing fees, negotiation commissions and acceptance fees, as applicable.

4.7.2 With respect to each commercial Letter of Credit issued through USBTS-Hong Kong, and each draft drawn thereunder, Lender's customary issuance fees, negotiation commissions and acceptance fees, as applicable, but no processing fee.

CREDIT AGREEMENT Page 6


4.7.3 With respect to each Commercial Letter of Credit not issued through USBTS-Hong Kong, and each draft drawn thereunder, Lender's customary issuance fees, negotiation commissions and acceptance fees, as applicable, and a processing fee of 12.5 Basis Points or $35, whichever is more, payable at the time of drawing by the beneficiary.

4.7.4 With respect to each standby Letter of Credit, an issuing fee of 50 Basis Points per annum, calculated from and including the date of issuance (or date of renewal or extension if any) thereof to the expiry date thereof on the basis of actual days divided by 360.

ARTICLE V
LOAN FEES

In addition to the Letter of Credit fees payable under Section 4.7, Borrower shall pay to Lender the following fees:

5.1 A Facility Fee, payable at the end of each of calendar quarter, regardless of usage, computed by multiplying the Maximum Revolving Loan Amount by the following percentages which are based upon Borrower's Indebtedness Rating at the end of the applicable calendar quarter as follows:

---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
      Indebtedness Ratings             A / A2           A- / A3        BBB+ / Baa1        BBB / Baa2        BBB- / Baa3
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------
           Percentage                   .065%            .075%            .100%             .125%              .175%
---------------------------------- ---------------- ---------------- ----------------- ----------------- ------------------

5.2 A Closing Fee of $100,000, payable on the Closing Date.

ARTICLE VI
ADDITIONAL TERMS APPLICABLE TO CERTAIN CREDIT FACILITIES

6.1 Representation and Warranty of Credit Availability. Each request by Borrower for a Revolving Advance or Letter of Credit shall be deemed to be its representation and warranty that (a) such Revolving Advance may be made or such Letter of Credit issued without exceeding the applicable maximum amount determined in accordance with the provisions of this Agreement, (b) no Default has occurred, or will occur as a result of making such Revolving Advance or issuing such Letter of Credit, and (c) all representations and warranties set forth in this Agreement are true, accurate and complete as of the date of such request (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date).

ARTICLE VII
CONDITIONS PRECEDENT

7.1 Conditions of Initial Loans. The obligations of Lender to make its initial Revolving Advance or issue any Letter of Credit hereunder is subject to the condition that Lender shall have received on or before the Closing Date all of the following, in form and substance satisfactory to Lender:

(a) Credit Agreement and Notes. This Agreement and the Notes executed by Borrower;

(b) Resolutions; Incumbency.

1. Copies of the resolutions of the board of directors of Borrower authorizing the transactions contemplated hereby, certified as of the Closing Date by the Secretary or an Assistant Secretary of Borrower; and

2. A Certificate of the Secretary or Assistant Secretary of Borrower, dated the Closing Date, certifying the names, titles and true signatures of the officers of Borrower authorized to execute, deliver and perform, as applicable, this Agreement, and all other Loan Documents to be delivered by it hereunder;

(c) Organization Documents; Good Standing. Each of the following documents:

1. the articles or certificate of incorporation and the bylaws of Borrower as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of Borrower as of the Closing Date; and

2. good standing certificates for Borrower from the Secretary of State (or similar applicable governmental authority) of its state of incorporation and the state of its principal offices;

CREDIT AGREEMENT Page 7


(d) Legal Opinions.

1. an opinion of the Executive Vice-President and General Counsel to Borrower, dated as of the Closing Date and addressed to Lender, substantially in the form of Exhibit D; and

(e) Payment of Fees. Evidence of payment by Borrower of all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with Borrower's promise under this subsection (e) to pay Attorney Costs incurred or to be incurred by it through the closing proceedings including any such costs, fees and expenses arising under or referenced in Section 12.5;

(f) Certificate. A certificate signed by a Responsible Officer, dated as of the Closing Date, stating that:

1. the representations and warranties contained in Article VIII are true and correct on and as of such date, as though made on and as of such date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date; and except that the representation and warranty shall be deemed instead to refer to the last day of the most recent quarter and year for which financial statements have then been delivered, and to the most recent Form 10-K or 10-Q filed by Borrower with the SEC, in respect of the representations and warranties made in Article VIII Sections 8.5 and 8.10);

2. no Default or Event of Default exists or would result from the initial Borrowing; and

3. there has occurred since the date of the most recent Form 10-K or other public disclosure documents filed by Borrower with the SEC prior to the Closing Date (to the extent any such event or circumstance is disclosed in such document), no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect;

(g) Documents and Actions Relating to the Multi-Year Credit Agreement. A certificate of a Responsible Officer of Borrower certifying that there are no defaults in payment and performance of the Multi-Year Credit Agreement in accordance with the terms and conditions thereof; and

(h) Other Documents. Such other approvals, opinions, documents or materials as Lender may reasonably request.

7.2 Conditions to All Borrowings. The obligation of Lender to make any Revolving Loan or issue any Letter of Credit is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date:

(a) Notice of Borrowing. As to any Loan, Lender shall have received a Notice of Borrowing;

(b) Continuation of Representations and Warranties. The representations and warranties in Article VIII shall be true and correct on and as of such Borrowing Date with the same effect as if made on and as of such Borrowing Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date; and except that this subsection (b) shall be deemed instead to refer to the last day of the most recent quarter and year for which financial statements have then been delivered, and to the most recent Form 10-K or 10-Q filed by Borrower with the SEC, in respect of the representations and warranties made in
Section VIII Sections 8.5 and 8.10);

(c) No Material Adverse Effect. There has occurred since the date of the most recent Form 10-K or other public disclosure document filed by Borrower with the SEC prior to the Closing Date (to the extent any such event or circumstance is disclosed in such document), no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect; and

(d) No Existing Default. No default or Event of Default shall exist or shall result from such Borrowing.

Each Notice of Borrowing submitted by Borrower hereunder shall constitute a representation and warranty by Borrower hereunder, as of the date of each such notice or request and as of each Borrowing Date, that the conditions in this
Section 7.2 are satisfied.

CREDIT AGREEMENT Page 8


ARTICLE VIII
REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants:

8.1 Corporate Existence and Power. It is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.

8.2 Subsidiaries. Each of Borrower's corporate Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.

8.3 Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by Borrower of the Loan Documents are within Borrower's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any Governmental Authority and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon Borrower or result in the creation or imposition of any Lien on any asset of Borrower or any of its Subsidiaries.

8.4 Binding Effect. This Agreement and each other Loan Document to which Borrower is a party constitutes a valid and binding agreement of Borrower, and each Note and Loan Document, when executed and delivered in accordance with this Agreement, will constitute a valid and binding obligation of Borrower, enforceable against Borrower in accordance with its respective terms.

8.5 Litigation. Except as disclosed in Borrower's most recent Form 10-K or other public disclosure, there is no action, suit or proceeding pending against, or to the knowledge of Borrower threatened against or affecting, Borrower or any of its Subsidiaries before any court or arbitrator or any Governmental Authority in which there is a reasonable possibility of an adverse decision which could have a Material Adverse Effect.

8.6 ERISA Compliance. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Plan.

8.7 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be used solely for the purposes set forth in and permitted by Section 3.2 and
Section 4.2.

8.8 Title to Properties; Liens. Borrower and each Subsidiary have good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as could not, individually or in the aggregate, have a Material Adverse Effect. The property of Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted under Section 10.1.

8.9 Taxes. Borrower and its Subsidiaries have filed all United States federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by Borrower or any Subsidiary, other than any such taxes being contested in good faith and for which appropriate reserves have been established on the books and records of Borrower in accordance with GAAP. The charges, accruals and reserves on the books of Borrower and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of Borrower, adequate.

8.10 Financial Information. The most recent consolidated balance sheet of Borrower and its Consolidated Subsidiaries and the related consolidated statements of earnings, cash flows and stockholders' equity for the fiscal year then ended, reported on by Deloitte & Touche and set forth or as incorporated by reference in Borrower's most recent Form 10-K, a copy of which has been delivered to Lender, fairly represent, in conformity with GAAP, the consolidated financial position of Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year.

8.11 Environmental Matters. In the ordinary course of its business, Borrower considers the effect of Environmental Laws on the business, operations and properties of Borrower and its Subsidiaries as such business, operations and properties exist at the time. On this basis, Borrower has reasonably concluded that Environmental Laws at the time in effect are unlikely to have a Material Adverse Effect.

8.12 Regulated Entities. Borrower is not an "Investment Company" within the meaning of the Investment Company Act of 1940. Borrower is not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness.

CREDIT AGREEMENT Page 9


8.13 Insurance. The properties of Borrower and its Consolidated Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of Borrower, in such amounts, with such deductibles (and with such risk retention) and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Borrower or such Subsidiary operates.

8.14 Access Laws. Borrower and its Consolidated Subsidiaries are to the best of Borrower's knowledge and belief, not in violation of any Access Laws applicable to their operations to the extent that there is a reasonable possibility of an adverse decision or decisions which separately or together could have a Material Adverse Effect.

8.15 Disclosure. All information heretofore furnished by Borrower to Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by Borrower to Lender will be, true and accurate in all material respects on the date as of which such information is stated or certified.

ARTICLE IX
AFFIRMATIVE COVENANTS

Until payment and performance in full of all obligations of Borrower under the Loan Documents, Borrower agrees that so long as Lender shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless Lender waives compliance in writing:

9.1 Information. Borrower will deliver to Lender:

(a) as soon as available and in any event within 120 days after the end of each fiscal year of Borrower, a consolidated balance sheet of Borrower and its Consolidated Subsidiaries as of the end such fiscal year and the related consolidated statements of earnings, cash flows and stockholder's equity for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the SEC by Deloitte & Touche or other independent public accounts of nationally recognized standing (the "Independent Auditor"). Such report shall not be qualified as to (i) going concern or
(ii) any limitation in the scope of the audit.

(b) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of Borrower, a consolidated balance sheet of Borrower and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of earnings for such quarter and for the portion of Borrower's fiscal year ended at the end of such quarter and the consolidated statement of cash flows for the portion of Borrower's fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, GAAP and consistency by the chief financial officer or the chief accounting officer of Borrower;

(c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a Compliance Certificate of the chief financial officer or the chief accounting officer of Borrower;

(d) simultaneously with the delivery of each set of financial statements referred to in subsection (a), a statement of the Independent Auditor which reported on such statements (i) whether anything has come to their attention to cause them to believe that any Default existed on the date of such statements and (ii) confirming the calculations set forth in the Compliance Certificate delivered simultaneously therewith pursuant to subsection (c);

(e) forthwith upon the occurrence of any Default, a certificate of the chief financial officer or the chief accounting officer of Borrower setting forth the details thereof and the action which Borrower is taking or proposes to take with respect thereto;

(f) promptly upon the mailing thereof to the shareholders of Borrower generally, copies of all financial statements, reports and proxy statements so mailed and not previously delivered to Lender pursuant to this Section 9.1;

(g) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which Borrower shall have filed with the SEC and not previously delivered to Lender pursuant to this Section 9.1;

(h) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any

CREDIT AGREEMENT Page 10


such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA, or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of Borrower setting forth details as to such occurrence and action, if any, which Borrower or applicable member of the ERISA Group is required or proposes to take; and

(i) from time to time such additional information regarding the consolidated financial position of Borrower as Lender may reasonably request.

As to any information contained in materials furnished pursuant to subsection 9.1(g), Borrower shall not be separately required to furnish such information under subsection (a) or (b) above, but the foregoing shall not be in derogation of the obligation of Borrower to furnish the information and materials described in subsection 9.1(a) and (b) above at the times specified therein.

9.2 Conduct of Business and Maintenance of Existence. Borrower will continue, and will cause each Subsidiary to continue, to engage in business of the same general type as now conducted by Borrower and its Subsidiaries, and will preserve, renew and keep in full force and effect, and will cause each Subsidiary to preserve, renew and keep in full force and effect their respective corporate existence and their respective rights, privileges and franchises necessary or desirable in the normal conduct of business; provided that Borrower may (a) discontinue operations or dispose of property in the normal conduct of its business and (b) cause the dissolution of Subsidiaries or the merger of a Subsidiary into Borrower or into another Subsidiary as it may from time to time reasonably deem necessary or desirable in the conduct of its business.

9.3 Maintenance of Property. Borrower will keep, and will cause each Subsidiary to keep, all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted; provided that Borrower and each of its Subsidiaries may discontinue operations and dispose of property in the normal conduct of its business.

9.4 Insurance. Borrower will maintain, and will cause each Subsidiary to maintain with financially sound and reputable insurance companies, insurance on all their real and personal property in at least such amounts and against at least such risks (and with such risk retention) as are usually insured against by companies of established repute engaged in the same or similar business as Borrower or such Subsidiary, and Borrower will promptly furnish to Lender such information as to insurance carried as may be reasonably requested in writing by Lender.

9.5 Payment of Obligations. Borrower will pay and discharge, and will cause each Subsidiary to pay and discharge, at or before maturity, all their respective material obligations and liabilities, including tax liabilities, except where the same may be contested in good faith by appropriate proceedings, and will maintain, and will cause each Subsidiary to maintain, in accordance with the GAAP, appropriate reserves for the accrual of any of the same.

9.6 Compliance With Laws. Borrower will comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of Governmental Authorities (including Environmental Laws and ERISA), except where the necessity of compliance therewith is contested in good faith by appropriate proceedings and non-compliance during the period of such contest could not reasonably be expected to have a Material Adverse Effect.

9.7 Inspection of Property, Books and Records. Borrower will keep, and will cause each Subsidiary to keep, proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities. Upon the occurrence and during the continuance of a Default, Borrower will permit, and will cause each Subsidiary to permit, representative of Lender at Lender's expense, to examine any of their respective books and records (except as they relate to Borrower's trade secrets or other proprietary information of Borrower other than any information required to be delivered to Lender by Borrower under Section 9.1) and to discuss their respective finances and accounts with their respective officers, employees and independent public accountants, all at such reasonable times and as often as may reasonably be desired.

9.8 Use of Proceeds. The proceeds of the Loans made under this Agreement will be used by Borrower for the purposes set forth in Sections 3.2 and 4.2 and other lawful corporate purposes.

CREDIT AGREEMENT Page 11


9.9 Further Assurances. Promptly upon request by Lender, Borrower shall do, execute, acknowledge, and deliver, any and all such further acts, certificates, assurances and other instruments Lender may reasonably request from time to time in order to carry out more effectively the purposes of this Agreement or any other Loan Document.

ARTICLE X
NEGATIVE COVENANTS

So long as Lender shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless Lender waives compliance in writing:

10.1 Limitation on Liens. Neither Borrower nor any Consolidated Subsidiary will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except:

(a) Liens existing on the date of this Agreement securing the Indebtedness outstanding on the date of this Agreement in an aggregate principal amount not exceeding $500,000,000;

(b) any Lien existing on any specific tangible asset or assets of any Person at the time such Person becomes a Consolidated Subsidiary and not created in contemplation of such event, subject to subsection (e);

(c) any Lien on any asset securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that (i) in the case of land acquired for the purpose of constructing new business or operating facilities thereon, (A) such Lien attaches to such land within 24 months after the acquisition thereof and (B) construction of such new business or operating facilities thereon is substantially complete within 24 months after the acquisition of such land and (ii) in the case of any asset other than an asset of the type described in the preceding clause (i), such Lien attaches to such asset concurrently with or within 180 days after the acquisition thereof;

(d) any Lien on any specific tangible asset or assets of any Person existing at the time such Person is merged or consolidated with or into Borrower or a Consolidated Subsidiary and not created in contemplation of such event, subject to subsection (e);

(e) any Lien existing on any specific tangible asset or assets prior to the acquisition thereof by Borrower or a Consolidated Subsidiary and not created in contemplation of such acquisition; provided that in the case of any Lien permitted under this subsection (e) or under subsections (b) and
(d), any such Lien does not by its terms cover any such tangible assets after the time Borrower directly or indirectly acquires such assets which were not covered immediately prior thereto, and any such Lien does not by its terms secure any Indebtedness other than Indebtedness existing immediately prior to the time of acquisition of such assets;

(f) any Lien arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Indebtedness is not increased and is not secured by any additional assets;

(g) Liens arising in the ordinary course of its business which (i) do not secure Indebtedness and (ii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business;

(h) Liens arising from Borrower's or a Subsidiary's pledging of equipment, not otherwise permitted by the foregoing clauses of this Section, securing Indebtedness in an aggregate principal amount at any time outstanding not to exceed $500,000,000; and

(i) Liens on real property; provided that the aggregate value of real property owned by Borrower (not including for purposes of this proviso any real property acquired or held by Borrower subject to the interest of a lessor under a capital lease relating to such real property), as determined on a lower of cost or Fair Market Value basis (as defined below), exceeds the aggregate principal amount of Indebtedness secured by Liens on such real property in an amount not less than $250,000,000.

For purposes of Section 10.1 ("Fair Market Value") means with respect to any real property of Borrower or any Subsidiary at any date the open market cash purchase price that an informed and willing purchaser would pay for such real property in an arm's-length transaction to a willing and informed owner under no compulsion to sell, all as determined (i) if no Default has occurred and is continuing, at the option of Lender either (A) in good faith by the Board of Directors of Borrower or (B) by an appraisal conducted by an independent appraiser satisfactory to the Agent and Borrower, the cost of such appraisal to be shared equally by Borrower and Lender, and (ii) if a Default has occurred and is continuing, by an appraisal conducted by an independent appraiser satisfactory to Lender and Borrower, the cost of such appraisal to be borne solely by Borrower.

CREDIT AGREEMENT Page 12


10.2 Disposition of Assets. Borrower will not (i) consolidate or merge with or into any other Person or (ii) directly or indirectly sell, lease or otherwise transfer all or any substantial part of the assets of Borrower and its Consolidated Subsidiaries, considered as a whole, to any other Person; provided that Borrower may merge with another Person if (A) Borrower is the Person surviving such merger and (B) immediately after giving effect to such merger, no Default shall have occurred or be continuing.

10.3 Limitation on Subsidiary Indebtedness and Swap Contracts. Borrower shall not permit any Subsidiary to create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness or Swap Contracts, except:

(a) Indebtedness incurred pursuant to this Agreement;

(b) endorsements for collection or deposit in the ordinary course of business;

(c) Swap Contracts outstanding as of the Closing Date or entered into thereafter in the ordinary course of business;

(d) Surety Instruments in the ordinary course of business;

(e) Indebtedness existing on the Closing Date in an amount not to exceed $3,200,000;

(f) Indebtedness secured by Liens permitted by subsections 10.1(b),
(c), (d), (e) and (i);

(g) capital leases entered into by any Subsidiary after the Closing Date to finance the acquisition of equipment;

(h) Indebtedness of Wholly-Owned Consolidated Subsidiaries of Borrower to Borrower or to other Wholly-Owned Consolidated Subsidiaries of Borrower; and

(i) additional Indebtedness incurred after the Closing Date not exceeding $500,000,000 in aggregate principal amount at any time outstanding.

10.4 Use of Proceeds. Borrower shall not, and shall not suffer or permit any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance Indebtedness of Borrower or others incurred to purchase or carry Margin Stock,
(iii) to extend credit for the purpose of purchasing or carrying any Margin Stock or (iv) for any other purpose which violates Regulations T, U or X of the FRB.

10.5 Minimum Consolidated Tangible Net Worth. Borrower shall not permit its Consolidated Tangible Net Worth at any time to be less than $3,000,000,000; provided that upon (a) the purchase from time to time of common stock of Borrower by Borrower from one or more of the J.A. and Kathryn Albertson Foundation, Inc., or donees pursuant to the terms of the Foundation Stock Agreement, or (b) the purchase from time to time of common stock of Borrower by Borrower from Theo Albrecht or from Markus-Stiftung pursuant to the terms of the Markus-Stiftung Stock Agreement, Consolidated Tangible Net Worth shall be increased, for purposes of subsequent calculations hereunder, by an amount (the "CTNW Adjustment") equal to the excess (if any) of (i) the amount by which the purchase price of such common stock reduces Consolidated Tangible Net Worth over
(ii) the amount by which Consolidated Tangible Net Worth has been increased through the sale of common stock subsequent to the date of such purchase, excluding the effect of the exercise of employee stock options, all as determined in accordance with GAAP.

10.6 Fixed Charge Coverage Ratio. Borrower shall not permit its Fixed Charge Coverage Ratio as determined as of the last day of any fiscal quarter to be less than 2.70 to 1.00.

ARTICLE XI
EVENTS OF DEFAULT

11.1 Events of Default. Any of the following shall constitute an "Event of Default":

(a) Non-Payment. Borrower fails to make (i) when and as required to made herein, payments of any amount of principal of any Loan, or
(ii) within five Business Days after the same becomes due, payment of any interest, fee or any other amount payable hereunder or under any other Loan Document; or

(b) Representation or Warranty. Any representation, warranty, certification, or statement made by Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect on or as of the date made (or deemed made); or

CREDIT AGREEMENT Page 13


(c) Specific Defaults. Borrower shall fail to observe or perform any covenant contained in Sections 10.1 through 10.5, inclusive; or

(d) Other Defaults. Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a), (b) or (c) above) for 15 Business Days after the earlier of (i) the date upon which the chief financial officer, chief accounting officer or other senior officer of Borrower knew or reasonably should have known of such failure; or (ii) notice thereof has been given to Borrower by Lender; or

(e) Cross-Default. Borrower or any Subsidiary (A) fails to make any payment in respect of any Material Indebtedness (other than in respect of Swap Contracts), when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any Material Indebtedness, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Material Indebtedness or beneficiary or beneficiaries of such Material Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Material Indebtedness to be declared to be due and payable, or to be prepaid prior to its stated maturity, or to become payable, or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (1) any event of default under such Swap Contract as to which Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any Termination Event (as so defined) as to which Borrower or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by Borrower or such Subsidiary as a result thereof is greater than $30,000,000; or

(f) Insolvency; Voluntary Proceedings. Borrower or any Subsidiary
(i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) consents to or commences a voluntary Insolvency Proceeding with respect to itself; or (iv) takes any corporate action to authorize any of the foregoing; or

(g) Involuntary Proceedings. (i) An involuntary Insolvency Proceeding shall be commenced or filed against Borrower or any Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of Borrower's or any Subsidiary's properties, and any such proceeding or petition shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or

(h) ERISA. Any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $30,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV or ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $30,000,000; or

(i) Monetary Judgments. A judgment or order for the payment of money in excess of $30,000,000 shall be rendered against Borrower or any Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of 30 days; or

(j) Change of Control. There occurs any Change of Control.

11.2 Remedies. If any Event of Default occurs, then, and in every such event, Lender shall (i) have no further obligation to make Loans, (ii) by notice to Borrower declare the Loans (together with accrued interest thereon and all

CREDIT AGREEMENT Page 14


other amounts owing under the Loan Documents) to be, and the Loans (and such interest and other amounts) shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower and (iii) exercise all rights and remedies available to it under the Loan Documents or applicable law; provided that in the case of any of the Events of Default specified in subsections (f) or (g) (in the case of clause (i) of subsection (g) upon the expiration of the 60-day period mentioned therein), without any notice to Borrower or any other act by Lender, the obligation to make Loans shall thereupon terminate and the Loans (together with accrued interest thereon and all other amounts owing under the Loan Documents) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower.

11.3 Rights Not Exclusive. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.

ARTICLE XII
MISCELLANEOUS

12.1 No Waiver by Lender. No failure or delay of Lender in exercising any right, power or remedy under this Agreement or any Loan Document shall operate as a waiver of such right, power or remedy of Lender or of any other right. A waiver of any provision of any Loan Document shall not constitute a waiver of or prejudice Lender's right otherwise to demand strict compliance with that provision or any other provision. Any waiver, permit, consent or approval of any kind or character on the part of Lender must be in writing and shall be effective only to the extent specifically set forth in such writing.

12.2 Costs and Fees. Without limiting any other provisions of this Agreement, Borrower hereby agrees to pay Lender on demand an amount equal to all costs and expenses incurred by Lender in connection with the negotiation, preparation, execution, administration and enforcement of the Loan Documents, including without limitation all fees of outside counsel.

12.3 Agreements Enforceable. Borrower reaffirms the representations and warranties in each of the existing Loan Documents and acknowledges that except as amended previously or herein, each such Loan Document remains in full force and effect and is and shall remain valid and enforceable in accordance with its terms.

12.4 Notices. Except as otherwise specifically set forth in any Loan Document, all notices, requests and demands hereunder shall be in writing, and shall be deemed to have been given when hand-delivered, when deposited in the mail as first class, registered or certified mail, postage prepaid, or when sent by telecopier, addressed as set forth below; provided, however, that any notice, request or demand by Borrower to Lender shall not be effective until received by Lender. Any party may at any time change its address for notices by giving notice of such change to the other parties.

If to Borrower:           Albertson's, Inc.
                          250 Parkcenter Boulevard
                          Boise, ID  83706
                          Facsimile (208) 395-5407 and 395-6021

If to Lender:             U.S. Bank National Association
                          National Corporate Banking
                          P.O. Box 8247
                          Boise, Idaho 83733
                          Facsimile (208) 383-7574

12.5 Collection Costs and Attorney Fees. Whether or not litigation is commenced, Borrower promises to pay all costs of collecting any amounts which may become due to Lender under any of the Loan Documents. Without limiting the foregoing, if litigation is commenced to enforce or construe any term of any of the Loan Documents, the prevailing party shall be entitled to recover from the other party all costs thereof, including but not limited to such sums as the court may adjudge reasonable as attorney fees at trial, in any appellate proceeding, proceeding under the bankruptcy code or receivership and post-judgment attorney fees incurred in enforcing any judgment.

12.6 Integration; Conflicting Terms. This Agreement together with the other Loan Documents comprises the entire agreement of the parties on the subject matter hereof and supersedes and replaces all prior agreements, oral and written, on such subject matter. If any term of any of the other Loan Documents expressly conflicts with the provisions of this Agreement, the provisions of this Agreement shall control; provided, however, that the inclusion of supplemental rights and remedies of Lender in any of the other Loan Documents shall not be deemed a conflict with this Agreement.

12.7 Governing Law and Jurisdiction.

12.7.1 THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF IDAHO; PROVIDED THAT BORROWER AND LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

12.7.2 ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF IDAHO OR OF THE UNITED STATES FOR THE DISTRICT OF IDAHO, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER AND LENDER CONSENT, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS, AND IRREVOCABLY WAIVE ANY

CREDIT AGREEMENT Page 15


OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. BORROWER AND LENDER EACH WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY IDAHO LAW.

12.8 Additional Acts. Upon request by Lender, Borrower will from time to time provide such information, execute such documents and do such acts as may reasonably be required by Lender in connection with any indebtedness or obligations of any of them to Lender.

12.9 Documents Satisfactory to Lender. All information, documents and instruments required to be executed or delivered to Lender shall be in form and substance satisfactory to Lender.

12.10 Waiver of Jury Trial. BORROWER AND LENDER EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

12.11 Exhibits. All Exhibits referred to herein are attached hereto and hereby incorporated by reference as if fully set forth herein.

12.12 Computations. All interest rates and fees referred to herein shall be computed on the basis of a 360-day year and applied to the actual number of days elapsed.

12.13 References.

12.13.1 References to any Loan Document shall mean such Loan Document as amended, modified, supplemented or extended from time to time and any number of substitutions, renewals and replacements thereof or therefor.

12.13.2 References to governmental laws, statutes, ordinances, rules and regulations shall be construed as including all amendments, consolidations and replacements thereof or therefor.

12.14 Counterparts. This Agreement may be executed in any number of counterparts. Each signed counterpart shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument.

BORROWER:                                      LENDER:
ALBERTSON'S, INC.                              U.S. BANK NATIONAL ASSOCIATION


By  /s/ John F. Boyd                           By   /s/ James Henken
    --------------------------------                ---------------------------
    Group Vice President & Treasurer                Vice President


CREDIT AGREEMENT                                                        Page 16


Exhibit 21

ALBERTSON'S, INC. & SUBSIDIARIES

ALBERTSON'S, INC.

  Incorporated State:        Delaware

ABS FINANCE CO., INC.

  Incorporated State:        Delaware

ABS INSURANCE LTD.

  Incorporated State:        Bermuda

ACME MARKETS, INC.

  Incorporated State:        Delaware

ADVANTAGE STORES, INC.

  Incorporated State:        California

ALBERTSON'S LIQUORS, INC.

  Incorporated State:        Wyoming

ALBERTSON'S REALTY, INC.

  Incorporated State:        Idaho

ALBERTSONS STORES CHARITABLE FOUNDATION

  Incorporated State:        Idaho

AMERICAN DRUG STORES, INC.

  Incorporated State:        Illinois

AMERICAN FOOD AND DRUG, INC.

  Incorporated State:        Delaware

AMERICAN PARTNERS, L.P.

  Incorporated State:        Indiana

AMERICAN PROCUREMENT AND LOGISTICS COMPANY

Incorporated State: Delaware

AMERICAN STORES CHARITABLE FOUNDATION

  Incorporated State:        Utah

AMERICAN STORES COMPANY

  Incorporated State:        Delaware

AMERICAN STORES PROPERTIES, INC.

Incorporated State: Delaware

AMERICAN STORES PROPERTIES, INC. - ONE

Incorporated State: Delaware


AMERICAN STORES REALTY COMPANY, LLC

  Incorporated State:        Delaware

APLC PROCUREMENT, INC.

  Incorporated State:        Utah

ASC MEDIA SERVICES, INC.

  Incorporated State:        Utah

ASC PHARMACY, INC.

  Incorporated State:        Delaware

BERYL AMERICAN CORPORATION

  Incorporated State:        Vermont

CAL-PHARM, INC.

  Incorporated State:        California

FOOD BASKET

  Incorporated State:        California

GOOD SPIRITS, INC.

  Incorporated State:        Texas

GRETNA PROPERTIES, INC.

  Incorporated State:        Louisiana

HEALTH 'n' HOME CORPORATION

  Incorporated State:        Delaware

HODISCO, INC.

  Incorporated State:        Texas

JETCO PROPERTIES, INC.

  Incorporated State:        Delaware

JEWEL COMPANIES, INC., a 1985 Delaware Corporation

  Incorporated State:        Delaware

JEWEL FOOD STORES, INC.

  Incorporated State:        New York

JEWEL OSCO SOUTHWEST, INC.

  Incorporated State:        Illinois

JIM DANDY MARKETS

  Incorporated State:        California

JOAH, INC.

  Incorporated State:        Delaware

Page 2

KASCO AUTOMOTIVE PRODUCTS

  Incorporated State:        California

LS HOLDINGS, INC.

  Incorporated State:        Delaware

LUCKY STORES PROPERTIES, INC.

  Incorporated State:        Delaware

LUCKY STORES, INC. (DE)

  Incorporated State:        Delaware

LUCKY STORES, INC. (FL)

  Incorporated State:        Florida

LUCKY STORES, INC. (NV)

  Incorporated State:        Nevada

MFC-LIVONIA PROPERTIES, INC.

  Incorporated State:        Delaware

OAKBROOK BEVERAGE CENTERS, INC.

  Incorporated State:        Illinois

ORDISCO, INC.

  Incorporated State:        California

OSCO DRUG OF MASSACHUSETTS, INC.

  Incorporated State:        Massachusetts

OSCO DRUG OF TEXAS, INC.

  Incorporated State:        Delaware

SAV-ON REALTY, INC.

  Incorporated State:        Delaware

SCOLARI'S STORES, INC.

  Incorporated State:        California

SEESSEL HOLDINGS, INC.

  Incorporated State:        Tennessee

SHORTCO, INC.

  Incorporated State:        Texas

SMITTY'S SUPER MARKETS, INC.

  Incorporated State:        Missouri

Page 3

SUNRICH MERCANTILE CORP.

  Incorporated State:        California

U.S. SATELLITE CORPORATION

  Incorporated State:        Utah

Page 4

EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No. 333-54998 on Form S-3 and Registration Statement Nos. 2-80776, 33-2139, 33-7901, 33-15062, 33-43635, 33-62799, 33-59803, 333-82157, 333-82161, 333-87773 and 333-73194 on Form S-8 of Albertson's, Inc. and subsidiaries of our report dated March 25, 2004 (which report expresses an unqualified opinion and includes explanatory paragraphs relating to changes in methods of accounting for goodwill, closed stores and vendor funds and to the stock purchase agreement the Company entered into with J Sainsbury plc and JS USA Holdings Inc. to acquire all of the outstanding capital stock of the entities which conduct J Sainsbury plc's U. S. retail grocery store business) appearing in this Annual Report on Form 10-K of Albertson's, Inc. and subsidiaries for the year ended January 29, 2004.

Deloitte & Touche LLP
Boise, Idaho
March 25, 2004


EXHIBIT 31.1

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 periods covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal controls over financial reporting; and

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

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 26, 2004                       \S\ Lawrence R. Johnston
                                           -------------------------------
                                           Lawrence R. Johnston
                                           Chairman of the Board, Chief
                                           Executive Officer and President


EXHIBIT 31.2

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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; 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 over financial reporting.

Date: March 26, 2004                           \S\ Felicia D. Thornton
                                               ---------------------------
                                               Felicia D. Thornton
                                               Executive Vice President
                                               and Chief Financial Officer


EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Albertson's, Inc. (the "Company") for the period ending January 29, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Lawrence R. Johnston and Felicia D. Thornton, Chief Executive Officer and Chief Financial Officer, respectively of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

March 26, 2004

\S\ Lawrence R. Johnston
-----------------------------------------
Lawrence R. Johnston
Chief Executive Officer



\S\ Felicia D. Thornton
-----------------------------------------
Felicia D. Thornton
Chief Financial Officer

BROKERAGE PARTNERS