EFTA Document EFTA01382278

Amendment No. 3 to Form S-1 j'abk of Contents issue. In addition, the payment card networks required that forensic investigations be conducted of the intrusions. The forensic firm retained by us to conduct an investigation has issued separate reports for each intrusion (copies of which have been provided to the payment card networks). In both reports, the forensic firm found that not all of the PCI DSS standards had been met and that some of this non-compliance may have contributed to or caused at least some portion of the compromise that occurred during the intrusions. We believe it is probable that the payment card networks will make claims against us. These claims will likely include amounts for incremental counterfeit fraud losses and non-ordinary course operating expenses (such as card reissuance costs) that the payment card networks assert they or their issuing banks have incurred. If the payment card networks assert claims against us, we currently intend to dispute those claims and assert available defenses. At the present time, we cannot reasonably estimate a range of losses because to date no claims have yet been asserted and because significant factual and legal issues remain unresolved. We will continue to evaluate information as it becomes known and will record an estimate of loss when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable. There can be no assurance that we will not suffer a similar criminal attack in the future or that unauthorized parties will not gain access to personal information of our customers. While we have recently implemented additional security software and hardware designed to provide additional protections against unauthorized intrusions, there can be no assurance that unauthorized individuals will not discover a means to circumvent our security. Computer intrusions could adversely affect our brands, have caused us to incur legal and other fees, may cause us to incur additional expenses for additional security measures and could discourage customers from shopping in our stores. We use a combination of insurance and self-insurance to address potential liabilities for workers' compensation, automobile and general liability, property risk (including earthquake and flood coverage), director and officers' liability, employment practices liability, pharmacy liability and employee health care benefits. We use a combination of insurance and self-insurance to address potential liabilities for workers' compensation, automobile and general liability, property risk (including earthquake and flood coverage), director and officers' liability, employment practices liability. pharmacy liability and employee health care benefits and cyber and terrorism risks. We estimate the liabilities associated with the risks retained by us, in part, by considering historical claims experience, demographic and severity factors and other actuarial assumptions which, by their nature, are subject to a high degree of variability. Among the causes of this variability are unpredictable external factors affecting future inflation rates, discount rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns. The majority of our workers' compensation liability is from claims occurring in California. California workers' compensation has received intense scrutiny from the state's politicians, insurers, employers and providers, as well as the public in general. Our long-lived assets, primarily stores, are subject to periodic testing for impairment. Our long-lived assets, primarily stores, are subject to periodic testing for impairment. Safeway incurred significant impairment charges to earnings in the past, including in Safeway's fiscal years ended January 3, 2015, December 28, 2013 and December 29, 2012. Failure to achieve sufficient levels of cash flow at reporting units could result in impairment charges on long-lived assets. Our operations are dependent upon the availability of a significant amount of energy and fuel to manufacture, store, transport and sell products. Our operations are dependent upon the availability of a significant amount of energy and fuel to manufacture, store, transport and sell products. Energy and fuel costs are influenced by international, political and economic circumstances and have experienced volatility over time. To reduce the impact 34 hill). %%WV.. icc.go% A R: es edgar data' 1646972 000119312515335826A900395dsla.htm110 14'2015 9:03:02 AM1 CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0081573 SDNY_GM_00227757 EFTA01382278