Albertson's, Inc. (NYSE:ABS), one of the nation's largest food and drug retailing companies, yesterday reported sales of $9.5 billion and diluted earnings per share before merger-related costs of $0.60 for the thirteen-week quarter ended February 1, 2001. On a comparable thirteen-week basis, identical store sales were flat and comparable store sales (which include replacement stores) increased 0.3%. Total sales for the thirteen-week quarter decreased 3.6% when compared to last year's fourteen-week quarter. Total sales for the quarter increased 3.9% when compared on a thirteen-week basis to the same quarter last year and excluding sales from divested stores.

Peter Lynch, president and chief operating officer, said, "We saw improvement in our comparable sales figures and we see great sales-building opportunities ahead as we leverage the expertise of our marketing and operations teams across our 19 divisions. Our performance in November and December 2000 is particularly noteworthy because it compares against some of the best retail sales periods in recent history due to the Y2K stock up in 1999. Our results reflect a Company that is getting past the merger and focusing more externally on increasing our market share and providing the best value and service for our customers."

Operating profit before merger-related costs for the thirteen-week quarter was $523 million or 5.5% as a percent to sales. The LIFO adjustment for the fourth quarter was a credit of $43 million, resulting from a combination of lower inventory levels and deflation in some of the products the Company sells. Net earnings before merger-related costs were $246 million or 2.6% as a percent to sales. Earnings before interest, taxes, depreciation and amortization, and merger-related costs (EBITDA) on a FIFO basis were $739 million, or 7.7% as a percent to sales.

Merger-related costs for the quarter amounted to $42 million ($26 million after tax or $0.06 per basic and diluted share) which includes $20 million of period costs and $22 million in restructuring charges. Including all merger-related costs, the Company reported net earnings of $220 million, or $0.54 per basic and diluted share for the quarter.

"The good news is -- we've made progress,'' said Gary Michael, chairman and chief executive officer. ``We exceeded our earnings target and our associates did a good job during the quarter. We continued to improve operations in California at both the store and distribution level. In addition, the momentum we created in the fourth quarter is carrying over into the current year. Our business is healthy and we have solid strategies in place to enable us to make additional improvements and return this Company to the operating levels that everyone expects from Albertson's."

Annual sales were $36.8 billion for the fifty-two week year ended February 1, 2001. On a comparable fifty-two week basis, identical store sales increased 0.3% and comparable store sales increased 0.6%. Total sales for the fifty-two week year decreased 1.9% when compared to the prior fifty-three week year. Total sales for the year increased 3.8% when compared on a fifty-two week basis to the prior year and excluding divested stores' sales from both years.

For the year, operating profit before merger-related costs and a one-time charge was $1.8 billion. The LIFO adjustment for the year was a $23 million credit. Net earnings before merger-related costs and a one-time charge were $870 million, or 2.4% as a percent to sales. Diluted earnings per share before merger-related costs and a one-time charge were $2.08. Earnings before interest, taxes, depreciation and amortization, and merger-related costs and a one-time charge (EBITDA) on a FIFO basis were $2.8 billion, or 7.6% as a percent to sales. Cash flow from operations was $1.8 billion compared to $1.4 billion in 1999.

Merger-related costs and a one-time charge for the year amounted to $171 million ($105 million after tax or $0.25 per basic and diluted share). The annual pre-tax merger-related costs include $127 million in period costs and $24 million in restructuring charges. A one-time $20 million pre-tax charge was expensed to selling, general and administrative expenses in the first quarter of 2000 to reflect liabilities related to certain previously assigned leases and subleases to tenants who are in bankruptcy. The Company does not expect to exceed its original estimate on merger-related costs. Including merger-related costs and the one-time charge, net earnings for the year increased to $765 million compared to $404 million last year.

"Although we still have a lot of work ahead of us, we have made good progress on many fronts," said A. Craig Olson, executive vice president and chief financial officer. "The 'Culture of Thrift' is starting to take hold in the Company and our associates are committed to reducing costs. We plan to take $250 million out of our distribution and selling, general and administrative expenses during 2001. The first steps have been taken to review store work processes and eliminate non-value added activities. We are also currently reviewing our distribution and procurement processes to ensure we are operating our back stage functions as efficiently and effectively as possible. In addition, this year we were able to reduce FIFO inventories by over $250 million, net of new stores, and we have several training and technology initiatives in place to help us continue our progress in this area," said Olson.

The Company purchased and retired 4.1 million shares of its common stock during the fourth quarter at a total cost of $100 million, or an average of $24.48 per share. During the fiscal 2000 year, the Company purchased and retired 18.7 million shares at a total cost of $451 million, or an average of $24.15 per share.

During the fourth quarter the Company opened 11 combination food and drug stores, 15 stand-alone drugstores, 29 fuel centers and completed remodels on 62 food stores and 11 drugstores. The Company, during the quarter, closed 13 drugstores, 9 of which were replaced with newer stores, as well as 8 food stores, 3 of which were replaced with newer stores. For the fiscal year, the Company opened 56 combination food and drug stores, 1 conventional store, 1 warehouse store, 33 stand-alone drugstores, 74 fuel centers and completed remodels on 101 food stores and 13 drugstores. The Company during the year, closed 22 combination food and drug stores, 13 of which were replaced with newer stores and 21 conventional supermarkets, 1 of which was replaced with a newer store. The Company also closed 28 drugstores, 15 of which were replaced with newer stores. During the year, the Company also expanded its online drugstore Savon.com nationwide, allowing customers across the country to refill and order new prescriptions, choose from a full range of sundry items and access consumer health information.

Mike Reuling, vice chairman, said, "Increasing our return on capital is a top priority. Our capital expenditure program is two-fold: we are focused on allocating capital to markets where we believe we can generate the best returns and we are focused on taking costs out of the development process -- including building and equipment costs for our new and remodeled stores. In addition, consolidation of our distribution operations this past year and a move to more efficient inventory management procedures will help us improve our utilization of capital.

"During 2001, we expect to spend $1.9 billion on capital expenditures, including leases. Half of our retail investment this year will go toward remodels and replacement stores to help solidify our market positions and provide the best return on our investment. We plan to open 80 combination stores and 75 drugstores, and complete 115 major remodels and 75 minor remodels. With this capital plan we will improve or replace over 250 stores this year. In addition, we plan to open 105 fuel centers during the year. This should result in net retail square footage growth of approximately 4% for 2001," concluded Reuling.

The Company also said that at this time it is projecting fiscal year 2001 diluted earnings per share without merger-related costs to be approximately $2.20. For the first quarter of 2001, diluted earnings per share without merger-related costs are expected to be approximately $0.45. The earnings outlook reflects the Company's current strategic initiatives to increase sales, reduce costs and increase return on capital.

"While we are pleased with the improvements we've made this quarter, we think it is prudent to remain cautious going into 2001. The strategic initiatives we announced in January have enormous potential, but they will take time to realize and the near term economic outlook does cause some concern. External forces such as a slowing economy and declining consumer confidence could have an impact on our operations going forward. However, we remain committed to our strategic initiatives to increase sales, reduce costs and increase return on capital. We expect to build momentum throughout the year as we strengthen our marketing and merchandising expertise, realize our expense reduction efforts and allocate our capital more efficiently," concluded Michael.

Albertson's, Inc. is one of the largest retail food and drug chains in the United States. Based in Boise, Idaho, the Company currently operates 2,533 retail stores in 36 states across the United States.

The Company does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause actual results to differ from those set forth in the forward-looking information can be found in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-Q.

                           ALBERTSON'S, INC.
            (Unaudited - In millions except per share data)

Consolidated Earnings
                                13 Weeks Ended       14 Weeks Ended
                              February 1, 2001     February 3, 2000


Sales                         $9,544   100.00%      $9,899   100.00%
Cost of sales                  6,822     71.48       7,108     71.81

Gross profit                   2,722     28.52       2,791     28.19
Selling, general and
  administrative expenses      2,219     23.25       2,263     22.86
Litigation settlement
 Merger-related
 expense (income)                 22      0.23         (13)    (0.13)

Operating profit                 481      5.04         541      5.46
Other (expenses) income:
  Interest, net                 (104)    (1.09)       (109)    (1.10)
  Other, net                      (6)    (0.06)          7      0.08

Earnings before income taxes     371      3.88         439      4.44
Income taxes                     151      1.58         175      1.78

Earnings before
 extraordinary item              220      2.30         264      2.67
Extraordinary loss on extinguishment
 of debt, net of tax benefit of $7

Net Earnings                    $220     2.30%        $264     2.67%

Basic Earnings Per Share:
 Earnings before
 extraordinary item            $0.54                 $0.62
 Extraordinary item
 Net earnings                  $0.54                 $0.62

Diluted Earnings Per Share:
 Earnings before
  extraordinary item           $0.54                 $0.62
 Extraordinary item

 Net earnings                  $0.54                 $0.62

Weighted Average Number of
 Common Shares Outstanding:
  Basic                          408                   424
  Diluted                        409                   424

LIFO (income) expense before
 income taxes                   $(43)                   $3



                              52 Weeks Ended        53 Weeks Ended
                             February 1, 2001      February 3, 2000


Sales                        $36,762   100.00%     $37,478   100.00%
Cost of sales                 26,336     71.64      27,164     72.48

Gross profit                  10,426     28.36      10,314     27.52
Selling, general and
  administrative expenses      8,740     23.77       8,641     23.06
Litigation settlement                                   37      0.10
Merger-related
 expense (income)                 24      0.07         396      1.06

Operating profit               1,662      4.52       1,240      3.31
Other (expenses) income:
  Interest, net                 (385)    (1.05)       (353)    (0.94)
  Other, net                      (3)    (0.01)         12      0.03

Earnings before
 income taxes                  1,274      3.46         899      2.40
Income taxes                     509      1.39         472      1.26

Earnings before
 extraordinary item              765      2.08         427      1.14
Extraordinary loss
on extinguishment
 of debt, net of
 tax benefit of $7                                     (23)    (0.06)

Net Earnings                   $ 765     2.08%       $ 404     1.08%

Basic Earnings Per Share:
 Earnings before
 extraordinary item            $1.83                 $1.01
 Extraordinary item                                  (0.05)

 Net earnings                  $1.83                 $0.96

Diluted Earnings Per Share:
 Earnings before
  extraordinary item           $1.83                 $1.00
 Extraordinary item                                  (0.05)

 Net earnings                  $1.83                 $0.95


Weighted Average Number of
 Common Shares Outstanding:
  Basic                          418                   422
  Diluted                        418                   423

LIFO (income) expense before
 income taxes                  $ (23)                 $ 30


Consolidated Earnings - Without Merger-Related Costs and One-Time
Charges

                                13 Weeks Ended       14 Weeks Ended
                             February 1, 2001     February 3, 2000

Sales                         $9,544   100.00%      $9,899   100.00%
Cost of sales                  6,815     71.41       7,087     71.59

Gross profit                   2,729     28.59       2,812     28.41
Selling, general and
  administrative expenses      2,206     23.11       2,195     22.18

Operating profit                 523      5.48         617      6.23
Other (expenses) income:
  Interest, net                 (104)    (1.09)       (108)    (1.10)
  Other, net                      (6)    (0.06)          7      0.08

Earnings before
 income taxes                    413      4.32         516      5.21
Income taxes                     167      1.75         206      2.08

Net Earnings                    $246     2.57%        $310     3.13%

Earnings Per Share:
    Basic                      $0.60                 $0.73
    Diluted                    $0.60                 $0.73

Return on average
  stockholders' equity (1)     17.3%                 20.9%
Return on average assets (1)    6.1%                  7.5%

Effective tax rate             40.5%                 40.0%



                             52 Weeks Ended        53 Weeks Ended
                            February 1, 2001      February 3, 2000

Sales                       $36,762   100.00%      $37,478   100.00%
Cost of sales                26,299     71.54       27,122     72.37

Gross profit                 10,463     28.46       10,356     27.63
Selling, general and
  administrative expenses     8,630     23.47        8,427     22.49

Operating profit              1,833      4.99        1,929      5.15
Other (expenses) income:
  Interest, net                (385)    (1.05)        (352)    (0.94)
  Other, net                     (3)    (0.01)          12      0.03

Earnings before
 income taxes                 1,445      3.93        1,589      4.24
Income taxes                    575      1.56          634      1.69

Net Earnings                  $ 870     2.37%        $ 955     2.55%

Earnings Per Share:
    Basic                     $2.08                  $2.26
    Diluted                   $2.08                  $2.26

Return on average
  stockholders' equity (1)    15.3%                  17.0%
Return on average assets (1)   5.5%                   6.2%

Effective tax rate            39.8%                  39.9%


(1) Annualized for the thirteen weeks ended February 1, 2001 and
    fourteen weeks ended February 3, 2000.

--  Certain reclassifications have been made in the prior year to
    conform to classifications used in the current year.



                           ALBERTSON'S, INC.
                       (Unaudited - In millions)

Consolidated Balance Sheets

                                 February 1, 2001    February 3, 2000

Assets
Current Assets:
  Cash and cash equivalents               $ 57             $ 245
  Inventories                            3,364             3,481
  Property held for resale                  71               100
  Other current assets                     807               765

     Total Current Assets                4,299             4,591

Other Assets                               451               456

Goodwill and other intangibles, net      1,705             1,761

Land, Buildings and
 Equipment, net                          9,622             8,911

Total Assets                           $16,077           $15,719


Liabilities and Stockholders' Equity
Current Liabilities:
  Accounts payable                     $ 2,163           $ 2,176
  Current portions of long-term
   debt and capitalized lease
   obligations                              82               639

  Other current liabilities              1,150             1,254

   Total Current Liabilities             3,395             4,069

Long-Term Debt                           5,715             4,803
Capitalized Lease Obligations              227               187
Other Long-Term Liabilities
 and Deferred Credits                    1,046               958
Stockholders' Equity                     5,694             5,702

Total Liabilities and
  Stockholders' Equity                 $16,077           $15,719

Total Common Shares
 Outstanding at End of Period              405               424




Consolidated Cash Flows
                                  52 Weeks Ended      53 Weeks Ended
                                 February 1, 2001    February 3, 2000


Cash Flows From
Operating Activities:
 Net earnings                           $ 765             $ 404
 Adjustments to reconcile net
   earnings to net cash provided by
   operating activities:

 Depreciation and amortization            944               853
 Goodwill amortization                     57                59
 Merger-related noncash expense            21               271
 Net gain on asset sales                   (4)               (2)
 Net deferred income taxes                 11               (52)
 Decrease (increase) in cash surrender
  value of Company-owned
  life insurance                            4               (12)

 Changes in operating
  assets and liabilities                  (18)             (103)

   Net cash provided by
   operating activities                 1,780             1,418

 Cash Flows From
 Investing Activities:
   Net capital expenditures            (1,582)           (1,837)
   Decrease (increase)
    in other assets                        33              (122)
   Proceeds from divestitures                               476

    Net cash used in
     investing activities              (1,549)           (1,483)

 Cash Flows From
 Financing Activities:
  Proceeds from
   long-term borrowings                 1,232             1,841
  Payments on long-term
   borrowings                            (417)             (970)
  Net commercial paper and
   bank line activity                    (475)             (430)
  Proceeds from stock options
   exercised                                7                32
  Cash dividends paid                    (315)             (265)
  Stock purchased and retired            (451)
  Tax payments for options exercised                        (14)

  Net cash (used in) provided by
   financing activities                  (419)              194

Net (Decrease) Increase in Cash
  and Cash Equivalents                   (188)              129
Cash and Cash Equivalents
  at Beginning of Period                  245               116

Cash and Cash Equivalents
  at End of Period                       $ 57             $ 245

--  Certain reclassifications have been made in the prior year to
    conform to classifications used in the current year.