Safeway 2006 Annual Report Download - page 31

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SAFEWAY INC. AND SUBSIDIARIES
Despite the Company’s considerable efforts and technology to secure our computer network, security could be
compromised, confidential information could be misappropriated, or system disruptions could occur. This could lead to
loss of sales or profits or cause the Company to incur significant costs to reimburse third parties for damages.
Changes in Accounting Standards Financial statements are prepared in accordance with accounting principles
generally accepted in the United States. They are subject to interpretation by various governing bodies, including the
Financial Accounting Standards Board (“FASB”) and the SEC, which create and interpret accounting standards. For
many aspects of our business, such as workers’ compensation, store closures, employee benefit plans, stock-based
employee compensation, goodwill and income tax contingencies, these standards and their interpretations require
management’s most difficult, subjective or complex judgments. A change from current accounting standards could
have a significant effect on the Company’s results of operations.
Energy and Fuel Safeway’s operations are dependent upon the availability of a significant amount of energy and
fuel to manufacture, store and transport products. Energy and fuel costs have experienced volatility over time. To
reduce the impact of volatile energy costs, the Company has entered into contracts to purchase electricity and natural
gas at fixed prices to satisfy a portion of its energy needs. This is discussed further in Part II, Item 7 of this report under
the caption “Energy Contracts.”
Safeway also sells fuel. Significant increases in wholesale fuel costs could result in retail price increases and in lower
gross profit on fuel sales. Additionally, consumer demand for fuel may decline if retail prices increase. Such volatility
and the impact to our operations and financial results are difficult to predict.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The information required by this item is set forth in Part I, Item 1 of this report.
Item 3. Legal Proceedings
Information about legal proceedings appears under the caption “Legal Matters” in Note K to the consolidated
financial statements set forth in Part II, Item 8 of this report.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the stockholders during the fourth quarter of fiscal 2006.
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