Albertsons is in the midst of an exciting transformation! At the core of that change is our passion to win customers for life by "working harder to make their lives easier." That simple promise is creating a new energy across our company. From our distribution centers, to our offices, to the 92 million square feet of retail selling space in our 2,300 stores, over 200,000 men and women come to work each day focused on creating the biggest and best food and drug retailer in the world!

2002 proved to be one of the most demanding years in business history. In that environment, some companies stumbled, most struggled and more than a few failed to survive. Proudly, Albertsons was able to deliver a solid business performance, while at the same time completing one of the largest restructurings in retailing history.

At the heart of that performance were our 10 Core Values coupled with a relentless focus on the five Strategic Imperatives we launched in 2001. In the pages that follow, you will see a progress report highlighting many of our achievements around each imperative as well as letters from shoppers that show our values are forming a new customer-focused DNA that delivers results. Those achievements were the catalyst for change that began to move our company forward in so many areas during the past year.

As proof of our progress, the following results were recorded during the year:

• Earnings from continuing operations grew to $865 million, up from $496 million in 2001
• Cash from operations grew to $2.1 billion, up from $2.0 billion in 2001. This cash allowed us to:
• Open 92 new food and drug stores
• Remodel 207 existing stores... a 100% increase
• Return $862 million to shareowners via the repurchase of 35 million shares of our stock
• Pay $307 million in dividends... a yield of nearly 4% for shareowners at year end
• Reduce debt by $143 million
• Operating divisions were consolidated from 19 to 11
• The planned restructuring of the Company was completed. Since the turnaround began in April 2001, we have closed/sold 441 unprofitable or non-strategic stores and exited 4 major markets.