Albertsons 2014 Annual Report Download - page 23

standards, food safety, marketing of natural or organically produced food, facilities, equal employment
opportunity, public accessibility, employee benefits, wages and hours worked and licensing for the sale of food,
drugs and alcoholic beverages, among others. 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, require that the Company recall or
discontinue sale of certain products, make substantial changes to the Company’s facilities or operations, or
otherwise result in changes to the 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.
The Company’s supplier base includes domestic and foreign suppliers, and the Company has a limited number of
licensed stores in foreign countries. Accordingly, political or financial instability in these foreign countries,
changes in U.S. and foreign laws and regulations affecting the importation and taxation of goods, including
duties, tariffs and quotas, or changes in the enforcement of those laws and regulations could adversely impact the
Company’s financial condition and results of operations. In addition, the Company is required to comply with
laws and regulations governing ethical, anti-bribery and similar business practices. The Company may choose to
pursue further expansion into international markets. If the Company seeks and attains a larger international
footprint, it would be required to comply with additional foreign laws and regulations. Any failure to comply
with these laws or regulations could result in civil and/or criminal sanctions and could adversely affect the
Company’s financial condition and results of operations.
Food and drug safety issues and related unfavorable publicity could adversely affect the Company’s
operating results.
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 or injury may result in product liability claims, penalties and enforcement actions from government
agencies 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. It may be
necessary for the Company to recall unsafe, contaminated or defective products. Recall costs and product
liability claims can be material. While the Company generally seeks contractual indemnification and insurance
coverage from its suppliers, it might not be able to recover these significant costs from its suppliers.
The Company’s businesses may become subject to legal proceedings that may adversely affect the
Company’s financial condition and results of operations.
The Company’s businesses are subject to the risk of legal proceedings by employees, unions, consumers,
customers, 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. See also “Item 3—Legal Proceedings” below.
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