Albertsons 2015 Annual Report Download - page 12

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The Company registers a substantial number of its trademarks/service marks in the United States Patent and Trademark Office,
including many of its private-label product trademarks and service marks. U.S. trademark and service mark registrations are
generally for a term of ten years, renewable every ten years as long as the trademark is used in the regular course of trade. The
Company considers certain of its trademarks and service marks to be of material importance to its Independent Business, Save-
A-Lot and Retail Food segments and actively defends and enforces such trademarks and service marks.
Working Capital
Normal operating fluctuations in working capital balances can result in changes to cash flow from operations presented in the
Consolidated Statements of Cash Flows that are not necessarily indicative of long-term operating trends. The Company’s
working capital needs are generally greater during the months leading up to high sales periods, such as the time period from
prior to Thanksgiving through December. The Company typically finances these working capital needs with funds provided by
operating activities and short-term borrowings. Inventories are managed primarily through demand forecasting and
replenishing depleted inventories. There are no unusual industry practices or requirements relating to working capital.
Competition
The Company’s Independent Business, Save-A-Lot and Retail Food segments operate in a highly competitive environment.
The Company believes that the principal competitive factors faced by its own stores and stores licensed by the Company, as
well as the stores of independent retail customers it supplies, include price, quality, store locations, customer service,
convenience, assortment, in-stock levels, brand recognition, store conditions, in-store marketing and merchandising,
promotional strategies and other competitive activities.
The traditional wholesale distribution component of the Company’s Independent Business segment competes directly with a
number of traditional grocery wholesalers as well as specialty wholesalers. The Company believes it competes in this business
on the basis of price, quality, assortment, schedule and reliability of deliveries, service fees and distribution facility locations.
Principal competition for the Company’s Save-A-lot and Retail Food segments comes from traditional grocery retailers,
including regional and national chains and independent food store operators, and non-traditional retailers, such as supercenters,
membership warehouse clubs, specialty supermarkets, drug stores, discount stores, dollar stores, convenience stores, online
retailers and restaurants.
The Company believes that the success of its Independent Business, Save-A-Lot and Retail Food segments are dependent upon
the ability of its own stores and stores licensed by the Company, as well as the stores of independent retail customers it
supplies, to compete successfully with other retail food stores. Recent and ongoing consolidation within the grocery industry
has resulted in, and is expected to continue to result in, increased competition, including from some competitors that have
greater financial, marketing and other resources than the Company.
Employees
As of February 28, 2015, the Company had approximately 38,500 employees in its continuing operations. Approximately
16,000 employees are covered by 49 collective bargaining agreements. During fiscal 2015, 19 collective bargaining agreements
covering approximately 11,700 employees were renegotiated and four collective bargaining agreements covering
approximately 800 employees expired without their terms being renegotiated. Negotiations are expected to continue with the
bargaining units representing the employees subject to those expired agreements. During fiscal 2016, eight collective
bargaining agreements covering approximately 1,200 employees will expire. The majority of employees covered by these
expiring collective bargaining agreements are located in Midwestern markets. The Company is focused on ensuring
competitive cost structures in each market in which it operates while meeting its employees’ needs for attractive wages and
affordable healthcare and retirement benefits. The Company believes that it has generally good relations with its employees and
with the labor unions that represent employees covered by collective bargaining agreements. Upon the expiration of collective
bargaining agreements with employees, work stoppages could occur if we are unable to negotiate new contracts. A prolonged
work stoppage at distribution centers or a significant number of stores may have a material impact on the Company’s business,
financial condition or results of operations.