Albertsons 2013 Annual Report Download - page 19

Download and view the complete annual report

Please find page 19 of the 2013 Albertsons annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

standards, equal employment opportunity, employee benefits, and 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.
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’s 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 original assessments, the
Company’s financial condition and results of operations may be adversely affected. The impact of the Affordable
Care Act on the Company’s health plan program may increase health plan costs.
Legal Proceedings
The Company’s businesses are subject to the risk of legal proceedings by employees, consumers, suppliers,
stockholders, governmental agencies or others through private actions, class actions, administrative proceedings,
regulatory actions or other litigation. The outcome of litigation, particularly class action lawsuits and regulatory
actions, is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or
indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits may remain unknown for
substantial periods of time. The cost to defend future litigation may be significant. There may also be adverse
publicity associated with litigation that may decrease consumer confidence in the Company’s businesses,
regardless of whether the allegations are valid or whether the Company is ultimately found liable. As a result,
litigation may adversely affect the Company’s financial condition and results of operations.
17