Albertsons 2010 Annual Report Download - page 71

transaction, the Company purchased certain assets of the Fleming Corporation as part of Fleming Corporation’s
bankruptcy proceedings and sold certain assets of the Company to C&S which were located in New England.
Since December 2008, three other retailers have filed similar complaints in other jurisdictions. The cases have
been consolidated and are proceeding in the United States District Court for the District of Minnesota. The
complaints allege that the conspiracy was concealed and continued through the use of non-compete and non-
solicitation agreements and the closing down of the distribution facilities that the Company and C&S
purchased from the other. Plaintiffs are seeking monetary damages, injunctive relief and attorneys’ fees. The
Company is vigorously defending these lawsuits. On September 14, 2009, the United States Federal Trade
Commission (“FTC”) issued a subpoena to the Company requesting documents related to the C&S transaction
as part of the FTC’s investigation into whether the Company and C&S engaged in unfair methods of
competition. The Company is cooperating with the FTC. Although this matter is subject to the uncertainties
inherent in the litigation process, based on the information presently available to the Company, management
does not expect that the ultimate resolution of this lawsuit or the FTC investigation will have a material
adverse effect on the Company’s financial condition, results of operations or cash flows.
In July 2009, a putative class action complaint was filed in the United States District Court for the Southern
District of New York against the Company, an officer and the Executive Chairman of the Board alleging fraud
under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and
Rule 10b-5 under the Exchange Act. In October 2009, the lawsuit was transferred to the United States District
Court for the District of Minnesota. The complaint alleged that the Company withheld negative information
from the market by inflating its fiscal 2010 guidance in order to complete the Company’s note offering which
closed on May 7, 2009. On January 13, 2010, the plaintiff voluntarily dismissed the lawsuit without prejudice
and to date has not re-filed the action.
On January 7, 2010, the Company received a subpoena from the Office of Inspector General for the
Department of Health and Human Services’ Milwaukee Field Office in connection with an investigation of
possible false or otherwise improper claims for payment under the Medicaid program. The subpoena requests
retail pharmacy claims data for “dual eligible” customers (i.e., customers with both Medicaid and private
insurance coverage), information concerning the Company’s retail pharmacy claims processing systems, copies
of pharmacy payor contracts and other documents and records. The Company is cooperating with the Office of
Inspector General. Management cannot predict with certainty the timing or outcome of any review by the
government of such information.
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, although management believes it is remote, 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.
NOTE 14—SHAREHOLDER RIGHTS PLAN
On April 24, 2000, the Company announced that the Board of Directors adopted a Shareholder Rights Plan
under which one preferred stock purchase right is distributed for each outstanding share of common stock and
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