Albertsons 2014 Annual Report Download - page 25

Download and view the complete annual report

Please find page 25 of the 2014 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 144

  • 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
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

Volatility in fuel and energy costs and risk associated with compressed the natural gas pilot program could
adversely affect the Company’s results of operations.
The Company’s operations are dependent on the availability of a significant amount of energy and fuel to store
and transport products. Energy and fuel costs are influenced by international, political and economic
circumstances and have experienced volatility over time. To reduce the impact of volatile fuel and energy costs,
the Company has entered into contracts to purchase fuel, electricity and natural gas at fixed prices to satisfy a
portion of its expected needs. Additionally, the Company has invested in 35 semitrailer trucks powered by
compressed natural gas. In the recent past, the price of natural gas has been volatile, and this volatility may
continue. Additionally, having compressed natural gas equipment and a fueling station entails inherent risks,
including equipment defects, malfunctions and failures and natural disasters, which could result in flows of
natural gas, fires, explosions and other damages, and could subject the Company to additional regulation. The
Company is closely monitoring this pilot program and may expand it to additional distribution centers in the
future. Volatility in fuel and energy costs that exceeds offsetting contractual arrangements, or failure to recognize
the anticipated benefits from the compressed natural gas pilot program, could adversely affect the Company’s
results of operations.
Impairment charges for goodwill or other intangible assets may adversely affect the Company’s financial
condition and results of operations.
The Company is required to annually test goodwill and intangible assets with indefinite useful lives to determine
if impairment has occurred. Additionally, interim reviews are performed whenever events or changes in
circumstances indicate that impairment may have occurred. If the testing performed indicates that impairment
has occurred, the Company is required to record a non-cash impairment charge for the difference between the
carrying value of the goodwill or other intangible assets and the implied fair value of the goodwill or other
intangible assets in the period the determination is made.
The testing of goodwill and other intangible assets for impairment requires the Company to make significant
estimates about its weighted average cost of capital, future revenue, profitability, cash flows, fair value of assets
and liabilities, as well as other assumptions. These estimates may be affected by significant variability, including
potential changes in economic, industry or market conditions, changes in business operations and market
strategies, changes in competition or changes in the Company’s stock price and market capitalization. Changes in
these factors, or changes in actual performance compared with estimates of the Company’s future performance,
may affect the fair value of goodwill or other intangible assets, which may result in an impairment charge. The
Company cannot accurately predict the amount and timing of any impairment of assets. Should the value of
goodwill or other intangible assets become impaired, the Company’s financial condition and results of operations
may be adversely affected.
The Company’s stock price is subject to market and other conditions and may be volatile.
The market price of the Company’s common stock may fluctuate significantly in response to a number of factors.
These factors, some of which may be beyond the Company’s control, include the perceived prospects and actual
operating results of the Company’s business; changes in estimates of the Company’s operating results by
analysts, investors or the Company; the Company’s actual operating results relative to such estimates or
expectations; actions or announcements by the Company or its competitors; litigation and judicial decisions;
legislative or regulatory actions; and changes in general economic or market conditions. In addition, the stock
market in general has from time to time experienced extreme price and volume fluctuations. These market
fluctuations could reduce the market price of the Company’s common stock for reasons unrelated to the
Company’s operating performance.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
23