Safeway 2013 Annual Report Download - page 12

Table of Contents
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Food Safety, Quality and Health Concerns We could be adversely affected if consumers lose confidence in the safety and quality of
certain food products. Adverse publicity about these types of concerns, whether valid or not, may discourage consumers from buying our
products or cause production and delivery disruptions. The real or perceived sale of contaminated food products by us could result in product
liability claims, a loss of consumer confidence and product recalls, which could have a material adverse effect on our sales and operations.
Current Economic Conditions Our operations and financial performance are affected by economic conditions. While economic conditions
have recently improved, there is continued uncertainty about the strength of the economic recovery. If the current economic situation does not
continue to improve or if it weakens, consumers may reduce spending, trade down to a less expensive mix of products or trade down to
discounters for grocery items, all of which could impact our sales growth. Higher fuel prices could also dampen overall consumer demand.
We are unable to predict with certainty if the economy of the United States will continue to improve or the rate at which it will improve. If the
economy does not continue to improve or if it weakens, Safeway’s business, results of operations and financial condition could be adversely
affected.
Future Growth of Blackhawk Blackhawk’s business, financial condition, results of operations and prospects are subject to certain risks
and uncertainties. Consequently, actual results could differ materially from Blackhawk’s targeted earnings growth. There is no assurance
that Blackhawk will continue to grow at the same rate as it has in the past. Some of the specific risks and uncertainties include, but are not
limited to, the following:
•Blackhawk’s operating revenues may decline if it loses one or more of its top distribution partners or fails to attract new distribution
partners to its network.
•Blackhawk relies on its content providers for its product and service offerings, and the loss of one or more of its top content providers
or a decline in demand for their products, or Blackhawk’s failure to maintain existing exclusivity arrangements with content
providers or to attract new content providers to its network, could have a material adverse effect on its business, results of operations
and financial condition.
•Blackhawk relies on relationships with card issuing banks for services related to products for which it acts as program manager, and
its business, results of operations and financial condition could be materially and adversely affected if it fails to maintain these
relationships or if it maintains them under new terms that are less favorable to Blackhawk.
•Blackhawk operates in a highly and increasingly regulated environment, and failure by Blackhawk or the businesses that participate
in its distribution network to comply with applicable laws and regulations, including anti-money laundering, consumer protection,
federal banking and state unclaimed property and tax laws and regulations, could have a material adverse effect on Blackhawk’s
business, results of operations and financial condition.
•Due to seasonal fluctuations in Blackhawk’s business, adverse events that occur during the second or fourth fiscal quarter could
have a disproportionate effect on its results of operations and financial condition.
•Changes in card association rules or standards set by Visa, MasterCard and others, or changes in card association and debit
network fees or products or interchange rates, could materially and adversely affect Blackhawk’s business, financial condition and
results of operations.
•Recent and future acquisitions or investments could disrupt Blackhawk’s business and harm its financial condition. In the fourth
quarter of 2013, Blackhawk acquired InteliSpend Prepaid Solutions TM, a leader in the corporate incentives and consumer
promotions marketplace, and Retailo AG, a leading third-party gift card distribution network in Germany, Austria and Switzerland.
We recently announced our decision to distribute the remaining 37.8 million shares of Blackhawk common stock that we own to our
stockholders as discussed elsewhere in this report.
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