Albertsons 2008 Annual Report Download - page 108

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SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
wrongful conduct. On June 6, 2007, a jury awarded Mr. Johnson $0.5 for intentional infliction of emotional
distress and $16 for negligent misrepresentation. Previously, the Company prevailed in an arbitration action
against Market Place Holdings and obtained a $4 judgment against it for unpaid notes and accounts receivable.
The Company believes the jury verdict is contrary to the law and the facts presented at trial, and an appeal is now
before the Virginia Supreme Court. Management does not expect that the ultimate resolution of this lawsuit 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. Some of these routine
proceedings involve class allegations, many of which are ultimately dismissed. 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 involves 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 and believes recorded reserves are
adequate. 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.
Insurance Contingencies
As previously reported, the Company had outstanding workers’ compensation and general liability claims for
specific years of coverage with a former insurance carrier that was experiencing financial difficulties. On
January 3, 2008, the carrier agreed to pay the Company to assume the obligations covered under the previous
policy. The Company has recorded these obligations in its self-insurance liabilities and has obtained additional
policies where required. The resolution of this matter did not have a material adverse effect on the Company’s
financial condition, results of operations or cash flows.
Pension Plan / Health and Welfare Plan Contingencies
The Company contributes to various multi-employer pension plans under collective bargaining agreements,
primarily defined benefit pension plans. These plans generally provide retirement benefits to participants based on
their service to contributing employers. Based on available information, the Company believes that some of the
multi-employer plans to which it contributes are underfunded. Company contributions to these plans are likely to
continue to increase in the near term. However, the amount of any increase or decrease in contributions will depend
on a variety of factors, including the results of the Company’s collective bargaining efforts, investment return on the
assets held in the plans, actions taken by the trustees who manage the plans and requirements under the Pension
Protection Act and Section 412(e) of the Internal Revenue Code. Furthermore, if the Company were to exit certain
markets or otherwise cease making contributions to these plans at this time, it could trigger a withdrawal liability
that would require the Company to fund its proportionate share of a plan’s unfunded vested benefits.
The Company also makes contributions to multi-employer health and welfare plans in amounts set forth in the
related collective bargaining agreements. Some of the collective bargaining agreements contain reserve
requirements that may trigger unanticipated contributions resulting in increased health care expenses. If these
health care provisions cannot be renegotiated in a manner that reduces the prospective health care cost as the
Company intends, the Company’s Selling and administrative expenses could increase in the future.
F-42