Albertsons 2015 Annual Report Download - page 6

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Increased Employee Benefit Costs
• Increased operating costs resulting from rising employee benefit costs
• Potential increases in health plan costs resulting from health care reform
• Pension funding obligations related to current and former employees of the Company and the Company’s divested
operations
• Required funding of multiemployer pension plans and any withdrawal liability
• The effect of the financial condition of the Company’s pension plans on the Company’s debt ratings
Relationships with Albertson’s LLC, New Albertson’s, Inc. (“NAI”) and Haggen
• Disruptions in current plans, operations and business relationships
• Ability to effectively manage the Company’s cost structure to realize benefits from the Transition Services Agreement with
each of Albertson’s LLC and NAI (collectively, the “TSA”) and the Transition Services Agreement with Haggen (the
“Haggen TSA”)
• Impact of the Safeway acquisition by Albertson’s LLC on the Company’s relationships with Albertson’s LLC and NAI,
including the transition and wind down of the TSA, certain supply relationships and the operating agreement under which
the Company operates a distribution center owned by NAI
• Ability to provide services and transition and wind down services to NAI and Albertson’s LLC under the TSA and the
letter agreement regarding the TSA, as well as services to Haggen under the Haggen TSA, in an efficient manner that is not
disruptive to the Company, while eliminating costs directly and not directly tied to providing these services
• Ability to attract and retain qualified personnel to perform services under the TSA and the Haggen TSA
• The effect of the information technology intrusions that also impacted Albertson’s LLC and NAI
Intrusions to and Disruptions of Information Technology Systems
• Dependence of the Company’s businesses on computer hardware and software systems that are vulnerable to security
breach by computer hackers and cyber terrorists
• The intrusions into the Company’s information technology systems and the Company’s continued investigation to
determine the full extent of their impact, if any, on its business and future operating results
• Risk of misappropriation of sensitive data, including customer and employee data, as a result of the information
technology intrusions or any future cyber-attack or breach and potential related claims
• Costs of responding to inquiries, claims or enforcement actions in connection with the information technology intrusions
or any future attack or breach resulting in fees and penalties, the loss, damage or misappropriation of information, and
potential related damage to the Company’s reputation
• Inability to timely obtain the Company’s PCI DSS report on compliance that could result in fines or assessments
• Costs of complying with stricter privacy and information security laws
• Ability of the information technology systems of the Company or its vendors to prevent, contain or detect cyber-attacks or
security breaches
• Difficulties in developing, maintaining or upgrading information technology systems
• Major disasters, business disruptions or losses resulting from failure of these systems to perform as anticipated for any
reason or data theft, information espionage, or other criminal activity directed at the Company’s computer or
communications systems
• Inability to keep pace with changing customer expectations and new developments and technology investments by the
Company’s competitors
Economic Conditions
• Worsening economic conditions, consumer confidence or unemployment rates, each of which affect consumer spending or
buying habits
• Increases in unemployment, insurance and healthcare costs, energy costs and commodity prices, which could impact
consumer spending or buying habits and the cost of doing business
• Increases in interest rates, labor costs and tax rates, and other changes in applicable law
• Food and drug inflation or deflation
Governmental Regulation
• Costs of compliance with existing laws and regulations and changes in applicable laws and regulations that impose
additional requirements or restrictions on the operation of the Company’s businesses
• The ability to timely obtain permits, comply with government regulations or make capital expenditures required to
maintain compliance with government regulations, including those governing ethical, anti-bribery and similar business
practices
• Potential costs of compliance with additional foreign laws and regulations if the Company seeks and attains a larger
international footprint