Albertsons 2012 Annual Report Download - page 18

Company and the other participating employers. Underfunded multiemployer pension plans may impose a
surcharge requiring additional pension contributions. 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 in the plan. The Great Atlantic & Pacific Tea Company (“A&P”) emerged from bankruptcy on
February 28, 2012, and is a participant in five multiemployer plans with the Company. Each of those
multiemployer plans has filed a claim as an unsecured creditor under A&P’s Plan of Reorganization for
withdrawal liability incurred prior to A&P’s emergence from bankruptcy. Based on the information available to
the Company the resolution of those claims and the impact of the A&P bankruptcy on the Company’s future
payments or unfunded liabilities is not currently probable or reasonably estimable. A significant increase to
funding requirements could adversely affect the Company’s financial condition, results of operations or cash
flows.
If the Company is unable to control healthcare benefits and pension costs, the Company may experience
increased operating costs, which may adversely affect the Company’s financial condition and results of
operations.
Governmental regulations
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, employee benefits, 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
adversely impact the Company’s business operations and prospects for future growth and its ability to participate
in federal and state healthcare programs. 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 may, 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 may adversely affect the Company’s financial condition and results
of operations.
Food and drug safety concerns and related unfavorable publicity
There is increasing governmental scrutiny and public awareness regarding food and drug safety. The Company
may be adversely affected if consumers lose confidence in the safety and quality of the Company’s food and drug
products. Any events that give rise to actual or potential food contamination, drug contamination or food-borne
illness may result in product liability claims and a loss of consumer confidence. In addition, adverse publicity
about these types of concerns whether valid or not, may discourage consumers from buying the Company’s
products or cause production and delivery disruptions, which may adversely affect the Company’s financial
condition and results of operations.
Insurance claims
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 healthcare 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.
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