Albertsons 2008 Annual Report Download - page 17

providing benefits through such plans have escalated rapidly in recent years and contributions to these plans may
continue to create collective bargaining challenges. The amount of any increase or decrease in the Company’s
required contributions to these multi-employer plans will depend upon many factors, including the outcome of
collective bargaining, actions taken by trustees who manage the plans, government regulations, the actual return
on assets held in the plans and the potential payment of a withdrawal liability if the Company chooses to exit a
market. Increases in the costs of benefits under these plans coupled with adverse stock market developments that
have reduced the return on plan assets have caused some multi-employer plans in which the Company
participates to be underfunded. The unfunded liabilities of these plans may result in increased future payments by
the Company and the other participating employers, including costs that may arise with respect to any potential
litigation or that may cause the acceleration of payments to fund any underfunded plan. The Company’s risk of
such increased payments may be greater if any of the participating employers in these underfunded plans
withdraws from the plan due to insolvency and is not able to contribute an amount sufficient to fund the
unfunded liabilities associated with its participants of the plan. If the Company is unable to control health care
and pension costs, the Company may experience increased operating costs, which may have a material adverse
effect on the Company’s financial condition and results of operations.
If the Company is unable to comply with governmental regulations or if there are unfavorable changes in
such government regulations, the Company’s financial condition and results of operations may be
adversely affected.
The Company’s businesses are subject to various federal, state and local laws, regulations and administrative
practices. These laws require the Company to comply with numerous provisions regulating health and sanitation
standards, equal employment opportunity, minimum wages and licensing for the sale of food, drugs and alcoholic
beverages. The Company’s inability to timely obtain permits, comply with government regulations or make
capital expenditures required to maintain compliance with governmental regulations may affect the Company’s
ability to open new stores or expand existing facilities, which could adversely impact the Company’s business
operations and prospects for future growth. In addition, the Company cannot predict the nature of future laws,
regulations, interpretations or applications, nor can the Company determine the effect that additional
governmental regulations or administrative orders, when and if promulgated, or disparate federal, state and local
regulatory schemes would have on the Company’s future business. They could, however, impose additional
requirements or restrictions on the products the Company sells or manner in which the Company operates its
businesses. Any or all of such requirements could have an adverse effect on the Company’s financial condition
and results of operations.
If the number or severity of claims for which the Company is self-insured increases, or the Company is
required to accrue or pay additional amounts because the claims prove to be more severe than the
Company’s recorded liabilities, the Company’s financial condition and results of operations could be
adversely affected.
The Company uses a combination of insurance and self-insurance to provide for potential liabilities for workers’
compensation, automobile and general liability, property insurance and employee health care benefits. The
Company estimates the liabilities associated with the risks retained by the Company, in part, by considering
historical claims experience, demographic and severity factors and other actuarial assumptions which, by their
nature, are subject to a degree of variability. Any actuarial projection of losses concerning workers’
compensation and general and automobile liability is subject to a degree of variability. Among the causes of this
variability are unpredictable external factors affecting future inflation rates, discount rates, litigation trends, legal
interpretations, benefit level changes and actual claim settlement patterns.
Some of the many sources of uncertainty in the Company’s reserve estimates include changes in benefit levels,
medical fee schedules, medical utilization guidelines, vocation rehabilitation and apportionment. If the number or
severity of claims for which the Company is self-insured increases, or the Company is required to accrue or pay
additional amounts because the claims prove to be more severe than the Company’s recorded liabilities, the
Company’s financial condition and results of operations could be adversely affected.
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