Working hard to make life easier for our customersPhoenix/Research/Tenant...Albertsons is working...

Working hardto make life easier for our customers

2004 ANNUAL REPORT

How do we define easier?

Fresh new products and ideas. Faster, more convenient service options.Better value on everyday shopping needs. More choices to suit more lifestyles than ever before.

These are the ideas reshaping our enterprise,re-energizing our associates and redefiningour brand promise at Albertsons today.

Around the store, around the neighborhood, across a vast enterprise, everyone at Albertsons is working hard to make life easier for our customers.

It’s a freshershopping

experience…

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with a wild harvest of

organic choices...

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a leading edge store design to serve every neighborhood’s needs.

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It’s a faster response...

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and a fast lane

self-checkout...

with 24 hour

pharmacy service...

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with convenient service options built into every store.

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It’s bigger, better, broader valueon items you buy every week.

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It’s a premium quality product line minus the premium price...

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and 10 for $10national specials to stock

your pantry shelves.

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It’s more choicesfor more lifestyles than ever before…

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with strong

brand partnerships

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and a low price format from Super Saver...

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with exciting new banners, from Shaw’s...

to Bristol Farms.

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ALBERTSONS 2004 ANNUAL REPORT Making life easier for our customers

Larry Johnston Chairman of the Board, Chief Executive Officer & President

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ALBERTSONS 2004 ANNUAL REPORT Making life easier for our customers page 15

Letter to Shareholders

As I travel the country visiting our stores, I’m sometimes asked, “Larry, have we hit the target? Is the restructuring over? When is the transformationcomplete?”

My answer is always the same — Never!

When you operate in an industry that is constantly changing, you must have an organization that is always adapting. Most importantly, when you serve a target customer who is constantly redefining her needs — not to mentiondiscovering new ones — you need a team that never stops innovating!

That’s the kind of enterprise we’re building today at Albertsons. Let me give you a progress reporton what turned out to be another economically and competitively challenging year for food anddrug retailers. Our 240,000+ associates continued their focus on the five imperatives that drive our success: 1) A customer-focused approach to growth; 2) aggressive cost and process control; 3) maximize return on invested capital; 4) a company-wide focus on technology; and 5) energizedassociates. Here’s what was accomplished during the year!

� Total sales grew +14% to $39.9 billion.� Cash flow from operations grew +38% to $2.1 billion.� Delivered total net earnings from continuing operations of $474 million or $1.28 per diluted share,

despite the challenges associated with the largest labor dispute in the industry’s history and the fourhurricanes that hit Florida.

� Total retail square footage grew +11% to 104.2 million square feet.� $1.3 billion was invested in new company infrastructure and technology.� We paid a dividend with an average yield of 3.2%, ranking Albertsons in the top 20% of S&P 500 companies.

This, coupled with our 5.4% increase in market value during calendar 2004, gave our shareholders a totalreturn of over 8%.

� Our share of the important Southern California grocery market returned to historical levels and above,following the labor dispute.

� Our core grocery business was expanded on both a geographic and a market segmentation basis as wecompleted the acquisitions of Shaw’s and Bristol Farms and also launched a new price-impact format, Super Saver.

� We passed the $1 billion mark in total cost savings since the turnaround of our company began in mid 2001,reaching the target one full year ahead of schedule.

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� The rollout began for a new industry-leading pharmacyautomation system that is revolutionizing how we servecustomers, ultimately providing them with access to theirprescriptions, account information and pharmacy recordsat any of our 2,000 pharmacies, by telephone or via anycomputer they wish to use.

� Finally, in one of my proudest moments since taking thehelm at Albertsons four years ago, I watched in awe andrespect as our Florida associates and the men and womenacross our enterprise who support them, pulled togetherin a truly heroic effort to reopen our Florida stores inareas of the state that were ravaged by four consecutivehurricanes. Despite personal loss and tremendous physicalobstacles, they had almost every one of our hurricane-affected stores reopened and serving critical customerneeds within 48 hours.

What was perhaps most exciting about 2004 was that we began to see the mounting impact of our fivestrategic imperatives, and how their applications arebeginning to drive change across the vast Albertsonsenterprise.

That impact centered directly on our customers – the focus of everything we do at Albertsons today.Following more than three years of success in extract-ing costs from our operations, last year we acceleratedthe reinvestment of a substantial portion of thosesavings in nationally coordinated pricing and mer-chandising strategies that are putting smiles on thefaces of our customers and vendors, while boostingour market share.

At the heart of this strategy is a new pricing program.“Check the Price” is simply a commitment to delivercompetitive, everyday value pricing on a broad arrayof items that our customers buy every week. This is along-term strategy designed to win customer loyaltyand the early results have been very encouraging. Notonly are we recapturing old customers and attractingnew ones, but we’re also delivering significant basesales growth in affected product items and categories.

Other, more targeted merchandising programs have been equally successful in both food and drugstores. Our weekly “10 for $10 Sale Mix or MatchSM”program encourages customers to stock their pantriesat competitive prices. In addition, our “extreme value

buy of the week” promotions have in some cases been so successful that we have literally sold out theavailable inventories of our suppliers.

Our ability to design and implement such effectivecustomer focused programs is, in turn, a direct resultof the significant progress we have made in building a faster, better integrated consumer demand chain. The speed and efficacy with which we are monitor-ing consumer desires and meeting them with compet-itively priced merchandise is growing every day. Price optimization and promotional effectivenesstools are just two dimensions of our new surgicalpricing systems. Our increasing power to move largevolumes of product in effective, nationally coordi-nated promotions has also caught the attention of our vendors. As these coordinated promotionsbecome better integrated into our consumer demandchain, opportunities to capture even greater savingswill continue to emerge.

In addition to better value, Albertsons customers now have more choices than ever before in how andwhere they shop. During 2004 we continued therollout of our new Renaissance drugstore format. This new format provides a more exciting shoppingexperience through the addition of enhanced beautycare, digital photo and an expanded food offering.Nearly 100 drugstores as well as the drug side of our grocery stores now include elements of theRenaissance format.

In April 2004, we completed the acquisition of ahighly regarded food retailer with market-leadingpositions in the six New England states where itoperates. The Shaw’s supermarket chain is aninnovative merchandiser and marketer that bringssignificant synergies and human capital to theAlbertsons leadership team. We acquired the com-pany for approximately $2.5 billion, an investmentthat was immediately accretive to consolidatedearnings. By the end of the third year following deal closure, the Shaw’s acquisition is expected todeliver annual savings in operating expenses of $100 to $125 million. The integration is on track and actually delivering synergies ahead of schedule.

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installed. Meanwhile, our Shop 'n' Scan system isbeing used by consumers in over 100 stores primarilyin the Dallas-Fort Worth metroplex as we test newapplications and ready the system for expansion.

The company also made major strides in 2004 tofurther energize associates and develop a strongerbond in the communities where we live and work.Over 7,000 leaders have now attended the SuccessfulLife Course and are certified ambassadors to spread its concepts of inspired daily living across ourcompany. In addition, our associates continued tostrengthen our community involvement through our CORUS volunteer network, by donating over1,000,000 volunteer hours to needy causes. Across the company our 33 affinity groups also continued to provide mentoring opportunities for our femaleand minority associates.

All of the accomplishments that I’ve described for youhere merely scratch the surface of what is happeningat Albertsons today. I hope they give you a flavor ofjust how ingrained the spirit of change is and how the drive for constant innovation has permeated ourenterprise. This change and innovation is the fuel thatwill continue to drive our success.

Each day, in thousands of ways large and small, we’retransforming our company across a wide spectrum of dimensions, all focused on redefining our brandpromise to make life easier for our customers. Risingevery morning with a positive attitude our associatesare creating a “Terrific” environment to shop in. Asalways, I invite you to come in and see the differencethat such passion and commitment can make!

Larry JohnstonChairman of the Board, Chief Executive Officer & President


In September, we also entered the price impactsegment, launching our new Super Saver chain withthe opening of the first seven locations in Texas andLouisiana. This new format is operated through anindependently managed entity and offers a limitedassortment of high quality food items, and whenspace allows, an Osco or Sav-on pharmacy in abright, clean environment with minimal services inorder to hold down overall operating costs. Thesestores are a direct response to our most price-sensitivecustomers. The design and merchandise assortmentdirectly reflects the desires of this customer segment.We expect this chain will grow aggressively.

Also in September, we acquired Bristol Farms, a highly successful fresh, gourmet and specialty food retailer located in Southern California. Thisinnovative chain of 11 stores serves an affluent anddemanding clientele in cities like Newport Beach, with one-of-a-kind products that range from primeJapanese Kobe beef to freshly prepared hot and cold foods reflecting the rainbow of cultures repre-sented in the area. We acquired Bristol Farms with its management team intact and will continue to operate it as an independently managed subsidiary.We also expect to learn many valuable lessons fromthis high-end niche marketer, operating in one of the fastest growing segments of our industry today.

Technology also remains an important strategicimperative at Albertsons, both to strengthen connec-tions with our customers and to make their liveseasier. We continue to be the largest online grocer in the industry today, measured by geographic reach,with online ordering and delivery services in majormetropolitan areas across the United States. Last yearwe expanded service into Philadelphia, Phoenix,Sacramento, New Jersey, Palm Springs, Salt Lake Cityand Santa Barbara.

Within our stores, technology plays an increasinglyimportant role in the services we offer customers,from the speed and convenience of self-checkout to the revolutionary capabilities of our wireless Shop'n' Scan shopping system to our new ARx pharmacyautomation system. More than 60% of our food storesnow feature a self-checkout option with 4,600 lanes

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Strategic Imperative #1:

Focusing on Customers to Drive Growth

Every week, in tens of millions of homes across

America, a decision is made about where to shop for the

family’s food and health needs..... and every week, millions

of consumers are discovering new reasons to choose the

Albertsons family of brands.

We begin with a single brand promise – to make

life easier for our customers. It’s a commitment that keeps

us constantly innovating – expanding the choices we offer

and sharpening the value proposition of those choices for

our customers.

That commitment has recently been given freshmeaning for millions of our shoppers across the United States

as they discover our new pricing initiatives. “Check the Price”

has established better values on hundreds of products our cus-

tomers buy most frequently. “10 for $10” promotions encourage

customers to re-stock their pantries more conveniently and our

“extreme value buy of the week” moves tremendous volumes

of targeted items through our national network of stores. Our

customers are voicing their enthusiastic approval by significantly

boosting purchases of these items and related product offerings.

Broader choice is also a theme becoming more visible

throughout our stores. It can be seen in our new boutique

specialty departments, including “Wild HarvestSM” natural

and organic foods and “Shop the World Food Hall®” international

foods. It is apparent in the range of top consumer brands who

partner with us in-store, from Starbucks® to Toys “R” Us®. It’s

also clear in the depth and breadth of our own branded products,

including our premium quality essensia™ brand, our value-priced

equaline™ healthcare products and the all new HomeLife™ general

merchandise brand.

Greater convenience and more personalized serviceare also on display at Albertsons today. Our neighborhood

marketing programs tailor product selections to local kosher,

Hispanic, African-American and Asian tastes. New technology-

enabled services, from online shopping and home delivery to

in-store Shop 'n' Scan and self-checkout options, put us firmly

in the ranks of the most progressive retailers in the world.

Albertsons customers can now “Shop the World”for their favorite international foods andseasonings. Boutique-style specialty displays like this appeal to a wide variety of shoppers.

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Light, bright, attractive store design encouragesbrowsing and enhances the pleasure of shopping in our health and beautysections.

Our neighborhood marketing strategies deliver unique selections of foods and services to suit local shoppers’needs. This kosher super-vised deli is one of manywe operate in Jewish neighborhoods across the country.


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Pursuing Aggressive Cost and Process Control

Albertsons is the first food and drug retailer to adopt a company-wide Six Sigma effort. This highly acclaimed quality program now drivesnumerous individual initiatives covering every corner of the enterprise.

We are focused on streamlining our consumerdemand chain, including improving distributioncenter efficiencies and consolidating distributionoperations.

American consumers today enjoy a revolution inretailing productivity that is delivering higher quality, greater

variety and better value than they have ever seen. It’s a force that

is transforming the retail food and drug industries. Albertsons is

determined to be a leader in the revolution.

Our company began this journey four years ago,

launching a series of initiatives to drive costs out of our opera-

tions, streamline the processes by which we source, distribute

and merchandise our products, and deploy innovative new tools

to better understand and serve our customers. Since then, we

have removed more than $1 billion in cost from our operating

systems, freeing up these funds for productive reinvestment in

our enterprise.

Investment in our consumer demand chain – the

multiple, interlocking processes of marketing, merchandising

and supply chain, remains a key priority. Last year, we continued

to build a centralized procurement process that leverages our

collective buying power and lowers our costs across entire

product and service categories. We also continued to develop a

more disciplined business planning process that utilizes stronger

collaborations with key vendors to execute national promotions

that capture the full power of consistent execution at our more

than 2,500 stores.

Most exciting of all, we exercised our growingcapabilities in pricing and promotional optimization to reinvest

a substantial portion of our cost savings in lower prices across

a broad array of the products our customers purchase most

frequently. These are the products that are most influential in

determining where consumers choose to shop. We believe that

large scale, carefully calibrated and strategically executed pricing

programs like this have the power to significantly enhance our

competitive posture, against both traditional food retailers, as

well as non-traditional competition.

Finally, continuous improvement is fast becoming a competitive imperative in the retailing revolution. Last

year, Albertsons became the first food and drug retailer to adopt

the well known continuous quality disciplines of Six Sigma.

We already have 50 Black Belts deployed, working on important

projects, and expect to train many more during 2005.

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Radio Frequency Identification (RFID) systems represent the leadingedge in efficient, real-time inventory management. Albertsons is testingRFID applications with several top suppliers.

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Company-Wide Focus on TechnologyToday, technology is transforming the way we operateat Albertsons. Leading-edge technology solutions are advancing

the efficiency of our operations, expanding the market intelligence

of our enterprise, and revolutionizing the services we provide.

For our customers, technology-enabled innovationmeans greater convenience, more choices and a better value

proposition. Our state-of-the art pharmacy automation systems,

for example, can identify customers, verify insurance reimburse-

ment, and fill hundreds of commonly requested prescriptions

quickly and accurately. We’ve now begun deployment of a next-

generation electronic pharmacy platform that, ultimately, will

connect our customers to their accounts via telephone, computer

or any of our 2,000 Sav-on and Osco retail pharmacies.

New customer-controlled technologies are alsoappearing in many of our supermarkets and drugstores.

More than 60% of our food stores now offer the convenience

of self-checkout. All our new Renaissance format drugstores

feature digital photo cropping and printing kiosks. We also

continue to lead the industry in the deployment of wireless

personal shopping technologies. Our Shop 'n' Scan handheld

shopping device, currently available in many of our Dallas-

Fort Worth and Chicago stores, puts more information, better

value and greater budgetary control into the hands of our

customers as they shop, while deepening our understanding

of their buying patterns and product needs.

In many major markets across the country, from Los Angeles to Philadelphia, shopping at Albertsons

also means online ordering and convenient home delivery of

groceries and health care items. During 2004, we expanded our

e-commerce capabilities to many new metropolitan markets.

Based on our expanding geographic reach, Albertsons remains

the number one e-commerce grocer in the United States.

Our website was also ranked third as the easiest internet site

to shop in 2004 by Customer Respect Group.

For the management of our enterprise, advanced

technologies, such as a real-time data warehouse, form a crucial

platform to learn, communicate and act with increasing speed

and efficiency. This technology leadership process touches

every link in our operations and builds on itself with every new

investment we make.

Shop 'n' Scan handheld scanning devices are precursors to a wireless future in which customerswill enjoy fully integrated communications linkingonline and in-store shopping services.

Understanding customer shopping patterns andpreferences can improve every aspect of our busi-ness from pricing strategies to inventory control.Our enterprise data warehouse is one of the largestof its kind in the world.

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Albertsons extended its online shopping and home delivery services to many new markets in2004. We remain the number one e-commercegrocer in the United States today based ongeographic reach.

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Maximizing Return on Invested CapitalThe Albertsons family of food and drugstore bannersincludes some of the most widely recognized and trusted names in

American retailing. Building the market share and enhancing the

long-term earnings power of this enterprise remains a crucial

imperative.

Last year, we invested $1.3 billion in projects to build

and remodel stores, improve our operational effectiveness, and

enhance the skills of our associates. We also added significantly

to the size and breadth of our asset portfolio through both

acquisition and the creation of a new retailing format.

In early 2004, we acquired one of New England’sleading food retailers, the 200-store Shaw’s supermarket

chain, for approximately $2.5 billion. This transaction expanded

the Albertsons footprint into six northeastern states, enriched

our bench of industry talent and created multiple opportunities

for the cross-fertilization of each organization’s best practices.

By the end of year three following the acquisition, we expect to

achieve operational savings of between $100 and $125 million.

Our second acquisition, a specialty gourmet retailchain serving Southern California’s most affluent shoppers,

was smaller in scale but strategically significant. Bristol Farms

generates far above average industry margins in its unique

retailing niche and opens a door for Albertsons into one of the

fastest growing segments of the retail food industry.

We also launched a new chain of high volume, price-impact stores last year to serve our most price-sensitive

customers. In mid-2004, our independently managed Extreme

Inc. subsidiary opened its first Super Saver grocery stores

in Texas and Louisiana. This format is designed to deliver a

limited range of foods and services in a comfortable, uncluttered

environment at the lowest possible prices. As the new chain gains

traction, we expect it will build out aggressively in other markets.

Our exciting new Renaissance drugstore format also

continues to win high marks from customers for convenience and

pleasure. As we learn from this platform, new innovations in store

formats are likely to emerge to capture specific opportunities in

the increasingly diverse retailing universe we serve.

Building innovative food and drug retailing centersin high-density, affluent locations, like this newAlbertsons in downtown San Francisco, deliversstrong returns on invested capital.

We continue to expand our Sav-on drugstore chain into areas in California and Nevada. The Sav-on brand ranks among the most visible and trusted names in drugstore retailing.

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The acquisition of Shaw’s in early 2004 expanded ourfootprint into the six New England states and added one of the top-performing U.S. supermarket chains to theAlbertsons family of store banners.

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Energized Associates

Each year Albertsons associates from across the United States compete in a hotly contested“Service Challenge”. The competition is one more opportunity to recognize and highlight outstanding customer service.

Albertsons associates are encouraged to learn everyaspect of their store’s operations. Top performersremain the most important source of talent for thefuture leadership of the company.

Our customers measure us by the passion, energy andcommitment of our individual associates. That’s how we like it.

We believe in the power of highly motivated individuals who can

deliver superior customer service, make better decisions and build

a stronger, more productive enterprise. It’s a belief that permeates

our operating culture and influences every new hire and promotion

we make.

Putting the right people in the right jobs begins at

the store level. Our store associates act as daily ambassadors to

our customers and also represent our largest and most important

source of talent and diversity for the future leadership of the

company. Recruiting and retaining top performing associates

is an ongoing challenge that we have tackled in recent years with

the adoption of a proprietary, interactive recruitment system,

Unicru. Focused on the positive, service-oriented attitudes we

prize, this new system has proven highly effective in delivering

a strong pool of candidates. We have adapted the system for

recruiting efforts across the company and have introduced it to

all 2,500 stores, including our recently acquired Shaw’s and

Star Market banners.

Diversity in all its forms is particularly prized atAlbertsons. Fresh ideas thrive best in a culture where diverse

points of view are respected and encouraged. On average we

serve the shopping baskets of 30 million Americans each

week. To understand their individual needs, our team must

reflect their individual values and their diverse cultural back-

grounds. Diversity at Albertsons is an everyday reality, visible

in the people we hire, the range of ideas we embrace and the

customers we serve.

Providing the right development tools as we navigatethe constant change that is a permanent part of modern

retailing is also a crucial issue at Albertsons today. We never stop

building educational tools and programs to help new and existing

associates develop professionally and reach their highest poten-

tial. Leadership aptitude is sought out and carefully monitored

as leaders at every level of our company are required to practice

continual succession planning for themselves and for key positions

in their organizations.

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Serving customers well is a passion among Albertsons’more than 240,000 associates and a driving force on our path to become the best food and drug retailer in the world.

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Corporate Leadership and Community Involvement

THE IDAHO STATESMAN

SUNDAY 01.16.05

Albertsons leads the way for women

Albertsons topped the list of the world’s 200 largest

companies for having the most women — and the highest

percentage of women, 54.5% — on its board.

54.5%

More than 300 Albertsons associates gathered last year for a women’s affinity group kick-offmeeting in Boise, Idaho. The group, known asM.E.S.A., is dedicated to mentoring, encouraging,and supporting female associates as they strive to achieve personal and professional goals.

For decades at Albertsons, we’ve built our food anddrug retailing enterprise around the individual needs of the

communities we serve. Connecting deeply at the local level not

only makes us better retailers, it also makes us better leaders and

better people.

That connection was on clear display last fall as 89

Albertsons stores in 10 Florida communities were ravaged by four

consecutive hurricanes. Despite huge personal loss and severe

destruction of company facilities, Albertsons associates from

different divisions across the nation joined together to help reopen

stores – most within 48 hours – and deliver crucial food, water

and health supplies to our customers. To support our own associ-

ates most affected by the hurricanes, Albertsons established a

hurricane assistance fund that distributed $1 million in aid.

Leadership often begins through personal connectionsmade at the local level. Minority and female associates often find

the support and encouragement they need to build strong and

satisfying careers through one of the more than 33 affinity groups

the company supports across our enterprise.

Individual leadership also finds expression atAlbertsons through community involvement. Our CORUS

volunteer network, with 165 associate chapters across the

United States, organizes and manages a range of volunteer

services that include hunger relief, after-school programs and

an annual service day. During 2004, our associates donated

more than 1,000,000 hours of community service.

Hunger relief also remains a key focus for Albertsons.

Last year, the company became the first food retailer in the

United States to initiate a nationwide “fresh rescue” program,

enabling the donation of limited-shelf-life dairy and meat products

to the local food banks of America’s Second Harvest. Meat and

dairy are often the most difficult items for local food banks to

acquire. In 2004, Albertsons distributed more than 25 million

pounds of food to food banks across the nation.

Health and nutrition also play a strong role in our

community support. Last fall, Albertsons launched a program to

promote healthy eating habits among school children, sponsoring

“healthy eating” field trips that teach students how to shop for

and create balanced meals. The company expects to reach more

than 100,000 children during the 2004-2005 school year.

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(pictured below, left) Albertsonsassociates helped with landscaping at the Children’s Home SocietyCrisis Nursery in Orlando, Floridaas part of last year’s CORUS Day of Caring.

Partnering with Habitat for Humanity,Albertsons associates used 110,250 nails,5,200 feet of 2X4’s, 2,500 shingles, 56quarts of paint and nine days of hard workto create a new home for a Dallas family.The project was part of a company-wideCORUS Day of Caring held last year.

Every year thousands of Albertsons asso-ciates participate in community walks andruns, like this Race for the Cure, to raisemoney for worthy causes.

(pictured below) More than 30 affinitygroups shared best practices and cele-brated accomplishments at Albertsons’third annual Affinity Group Forum heldlast October in Scottsdale, Arizona. Thegroups provide associates with mentoringand networking opportunities.

(pictured left) Albertsons associ-ates from across the countrytraveled to Florida last fall to help clean up and restock theshelves of stores affected by fourpowerful hurricanes.

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Financial Highlights

Corporate Profile

Fiscal Year Fiscal Year(dollars in millions, except per share data) 2004 2003 % Change

Sales $39,897 $35,107 +13.6Net Earnings $ 444 $ 556 -20.2Net Earnings % to Sales 1.11% 1.58% -29.7EPS – Basic $ 1.20 $ 1.51 -20.5EPS – Diluted $ 1.19 $ 1.51 -21.2Dividends Per Share $ 0.76 $ 0.76 0.0

Total Assets $18,311 $15,666 +16.9Stockholders’ Equity $ 5,421 $ 5,381 +0.8Common Shares Outstanding at Year End 368,265,000 367,519,000 +0.2

Number of Stores 2,503 2,305 +8.6Number of Associates 241,000 198,000 +21.7

Average Store Size (square foot):Food and Drug Stores 50,700 50,600 +0.2Drug Stores 18,400 18,500 -0.5Other* 39,200 – N/AAll Stores 41,600 40,800 +2.0

* Consists of Bristol Farms and Extreme Inc. locations, which are operated independently.

Albertsons is one of the largest retail food and drug chains in the world. The company operates 2,503 stores in 37 states across the country. Retail operations are supported by 19 major company-owned distribution centers.Albertsons is headquartered in Boise, Idaho, and employs approximately 240,000 people. The company’s stock is traded on both the New York Stock Exchange and Pacific Stock Exchange under the symbol ABS.

03 04

Sales(dollars in billions)

Net Earnings(dollars in millions)

Diluted EarningsPer Share (dollars)

03 04 03 04

$35.1

$39.9 $556

$444

$1.51

$1.19

Operating Area(yellow states)

2004 Square Footageby Store Format

� Food & Drug 86.9%

� Drug Stores 12.3%

� Other* 0.8%

2004 Number of Storesby Store Format

� Food & Drug 1,786

� Drug Stores 695

� Other* 22

*Consists of Bristol Farms and Extreme Inc. locations, which are operated independently.

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Albertsons Family of Brands

*

*

* Operated independently

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Larry JohnstonChairman of the Board, Chief Executive Officer & President

Bob ButlerExecutive Vice President, Food Operations & President, Intermountain West Division

Roe CefaloExecutive Vice President, Real Estate, Development and New Store Formats

Bob DunstExecutive Vice President & Chief Technology Officer

Gabe GabrielExecutive Vice President,Supply Chain and AssetManagement

Paul GannonExecutive Vice President & Chief Marketing Officer

Kathy HerbertExecutive Vice President,Human Resources

Duncan MacNaughtonExecutive Vice President,Merchandising

John SimsExecutive Vice President & General Counsel

Felicia ThorntonExecutive Vice President & Chief Financial Officer

Kevin TrippExecutive Vice President, Drugstore Operations &President, Drug Division

Back row: Larry Johnston, Gabe Gabriel, Paul Gannon, Kevin TrippMiddle row: Bob Butler, Roe Cefalo, John Sims, Bob Dunst

Front row: Kathy Herbert, Duncan MacNaughton, Felicia Thornton

Executive Officers


Gary AmesRetired President & Chief Executive Officer ofMediaOne International (atelecommunications company)

Pam BaileyChief Executive Officer & President of the Cosmetic,Toiletry and FragranceAssociation (the global tradeassociation for the personal care products industry)

Teresa BeckRetired President of AmericanStores Company (a food and drug retailer)

Hank BryantRetired Managing Director in the Corporate Finance Unit of J.P. Morgan & Co. Incorporated(an investment banking firm)

Back row: Gary Ames, Jon Madonna, Hank Bryant, Larry Johnston, Paul CorddryFront row: Teresa Beck, Beth Pritchard, Pam Bailey, Betty Rivera, Kathi Seifert, Bonnie Hill

Paul CorddryRetired Senior Vice President,Europe, of H.J. Heinz Company (a worldwide provider ofprocessed food products andservices)

Bonnie HillPresident of B.Hill Enterprises,LLC (a consulting firm special-izing in corporate governance and board organizational andpublic policy issues); Co-Founder,Icon Blue, Incorporated (custommarketing promotional solu-tions); and Retired President of The Times Mirror Foundation

Larry JohnstonChairman of the Board, Chief Executive Officer & President of the Company

Jon MadonnaRetired Chairman of the Board & Chief Executive Officer of KPMG Peat Marwick (an internationalaccounting & consulting firm)

Beth PritchardPresident & Chief ExecutiveOfficer of Organized Living,Incorporated (a retailer of home and office storage andorganization products)

Betty RiveraMember of Energy ResourceAssociates, LLC (an energyconsulting firm) and formerlyCabinet Secretary of the Energy, Minerals & NaturalResources Department of theState of New Mexico

Kathi SeifertChairman of the Board ofPinnacle Perspectives, LLC (a personal business consultingcompany); and Retired ExecutiveVice President of Kimberly-Clark(a global health & hygieneproduct manufacturing company)

EXECUTIVE COMMITTEELarry Johnston, ChairGary AmesTeresa BeckHank BryantPaul Corddry

AUDIT/FINANCE COMMITTEEHank Bryant, ChairPam BaileyTeresa BeckJon MadonnaBeth Pritchard

MANAGEMENT DEVELOPMENT/COMPENSATION COMMITTEEGary Ames, ChairPam BaileyPaul CorddryBonnie HillBeth PritchardBetty RiveraKathi Seifert

NOMINATING/CORPORATEGOVERNANCE COMMITTEETeresa Beck, ChairPaul CorddryBonnie HillJon MadonnaBetty RiveraKathi Seifert

Board of Directors


Stock Price History

The company’s stock is traded on the New York Stock Exchange and Pacific Stock Exchange underthe symbol ABS. The high and low stock prices by quarter were as follows:

First Second Third Fourth YearHigh Low High Low High Low High Low High Low

2004 $25.33 $21.57 $27.75 $22.43 $25.80 $22.30 $25.93 $22.35 $27.75 $21.572003 $21.71 $17.76 $21.91 $17.91 $23.65 $18.40 $24.19 $19.50 $24.19 $17.762002 $35.49 $26.88 $35.49 $26.51 $28.66 $22.14 $24.60 $18.85 $35.49 $18.85

Dividend History

In March 2005, the Board of Directors declared a regular quarterly cash dividend of $0.19 per share. The dividend will be paid on May 10, 2005, to shareholders of record on April 13, 2005.

First Second Third Fourth Year

2004 $0.19 $0.19 $0.19 $0.19 $0.762003 $0.19 $0.19 $0.19 $0.19 $0.762002 $0.19 $0.19 $0.19 $0.19 $0.76

Top 10 Shareholders as of February 4, 2005Shares Held Percent of

Holder (millions) Outstanding

Capital Research & Management Company 36.8 10.0%Legg Mason Capital Management, Inc. 35.4 9.6%Brandes Investment Partners, LLC 35.3 9.6%Markus Stiftung 29.2 7.9%NWQ Investment Management Company, LLC 18.8 5.1%J.A. and Kathryn Albertson Foundation, Inc. 14.7 4.0%Hotchkis and Wiley Capital Management, LLC 14.2 3.9%UBS Global Asset Management (Americas), Inc. 13.3 3.6%Barclays Global Investors, N.A. 12.2 3.3%State Street Global Advisors (U.S.) 9.6 2.6%

Outstanding Shares 368.3

Top Institutional Shareholder information provided by Thomson Financial Corporate Group.Markus Stiftung and J.A. and Kathryn Albertson Foundation, Inc. information provided by American Stock Transfer & Trust Company.

Other Information

AddressAlbertson’s, Inc.Store Support Center250 Parkcenter BoulevardP.O. Box 20Boise, Idaho 83726Telephone: (208) 395-6200

Internet AddressMajor press releases and other corporate data are available on Albertsons’ website: www.albertsons.com

AuditorsDeloitte & Touche LLPBoise, Idaho

Stock Transfer Agent and RegistrarAmerican Stock Transfer & Trust Company59 Maiden LaneNew York, New York 10038Telephone: (888) 788-5081www.amstock.com

Shareholders of RecordThere were 26,383 shareholders of record at March 18, 2005.

Annual MeetingThe 2005 Annual Meeting of Shareholderswill be held on Thursday, June 2, 2005.

Dividend Reinvestment PlanThe company’s Dividend Reinvestment Plan allowss h a r e h o lders of record to inv e st their quart erlydividends automatically and to purchase additionalshares under the Plan with voluntary cash payments.More information may be obtained from AmericanStock Transfer & Trust Company at (877) 842-1551,www.investpower.com or from the Corporate Secretaryof Albertsons.

Information ContactInformation on individual accounts or on proceduresnecessary to make changes in an account is provided by American Stock Transfer & Trust Company at (888) 788-5081 Monday-Thursday between the hours of 8:00 a.m. and 7:00 p.m., Eastern Time, andFriday from 8:00 a.m. to 5:00 p.m., Eastern Time,after a shareholder identifies his or her account by providing a taxpayer identification number, theregistration name on the securities and the address of record. When directing correspondence to American Stock Transfer & Trust Company at theaddress shown, shareholders are reminded to includea reference to Albertsons.

Company Profile AvailableA copy of the Company Profile, which contains a discussion of our core values, including equalopportunity, environmental quality and communitysupport, as well as statistical information aboutthe company, is available to shareholders on thecompany’s website.

Corporate Governance GuidelinesA copy of the company’s Corporate GovernanceG u idelines is ava il a ble to shareholders on thecompany’s website, or without charge upon requestto the Corporate Secretary of Albertsons.

Annual CertificationsOn July 6, 2004, our Chief Executive Officer submittedhis annual certification to the New York StockExchange regarding Albertsons compliance with theNYSE’s Corporate Governance listing standards. Inaddition, our Chief Executive Officer and ChiefFinancial Officer submitted the certification requiredunder Section 302 of the Sarbanes-Oxley Act as anexhibit to Albertsons Form 10-K for the year endedFebruary 3, 2005.

Shareholder Information

Albertson’s, Inc. 250 Parkcenter Boulevard P.O. Box 20 Boise, Idaho 83726

www.albertsons.com

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