Albertsons 2015 Annual Report Download - page 21

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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. Additionally, under various federal, state and local laws, ordinances and regulations, the
Company could be liable for the failure to properly dispose of hazardous waste and costs of removal or remediation of
contamination at current or former locations. These costs could be substantial, and any failure to properly remediate such
contamination may subject the Company to liability to third parties and may adversely affect the Company’s ability to sell or
lease such property or to borrow money using such property as collateral.
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, debt holders, 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.
Severe weather and natural disasters may harm the Company’s business.
Severe weather conditions such as hurricanes, earthquakes, floods, extended winter storms or tornadoes, as well as other natural
disasters, in areas in which the Company has stores, offices or distribution facilities or from which the Company obtains
products may cause physical damage to the Company’s properties, closure of one or more of the Company’s stores, offices or
distribution facilities, lack of an adequate work force in a market, temporary disruption in the supply of products, disruption in
the transport of goods, delays in the delivery of goods to the Company’s distribution centers or stores, a reduction in customer
volume and a reduction in the availability of products in the Company’s stores. In addition, adverse climate conditions and