One of our most significant competitive advantages is our dual heritage and
expertise in both food and drug retailing. We are moving aggressively to
leverage that expertise to create a network of combination food and drug stores
that are unlike any others in the industry. This exciting retail concept creates a
new and more rewarding shopping experience, giving consumers the best drug
store and the best grocery store in their neighborhood... both under one roof.

This strategy continues to achieve outstanding results in the Chicago metro area
where the concept has been time-tested with our market leading Jewel-Osco
banner. "One-stop" shopping at Jewel-Osco now includes not only food and
drug, but also on-site banking, full-service bakeries, prepared meals, floral
shops and photo processing services. There are currently 187 Jewel-Osco
stores in Illinois, Iowa, Indiana and Wisconsin. Our new Albertsons-Osco brand
now operates throughout the Phoenix, Tucson and Omaha markets and plans
are underway for additional deployments. Our Albertsons-Sav-on brand is now
in place in Reno and, in 2003, we will begin to roll-out this powerful new brand
as we invest $1 billion over the next 3 years to dual-brand Las Vegas and
Southern California.

Albertsons is the only major grocer who owns drugstore brands and is the sixth
largest provider of pharmacy services in the U.S. today. With the rapid aging of
America, that capability is very strategic as prescription drug usage continues
to escalate. Our continued expansion of pharmacies and drug store
merchandising will help drive our future profitability and growth.