If we are unable at any time to meet any required funding
obligations for some of our U.S. pension plans, or if the
Pension Benefit Guaranty Corporation (the "PBGC")
concludes that, as the insurer of certain U.S. plan benefits,
its risk may increase unreasonably if the plans continue,
under the U.S. Employee Retirement Income Security Act of
1974 ("ERISA") the PBGC could terminate the plans and
place liens on material amounts of our assets. Our pension
plans that cover our Dutch retail operations are governed by
the Dutch Central Bank (De Nederlandsche Bank or "DNB").
DNB may require us to make additional contributions to our
pension plans to meet the minimum funding requirements
as applied by DNB.
In addition, health care costs have risen significantly in
recent years and this trend is expected to continue. We may
be required to expend significantly higher amounts to fund
employee health care plans in the future. Significant
increases in health care and pension funding requirements
could have a material adverse effect on our financial
position, results of operations and liquidity.
We may not be able to retain or attract personnel who
are integral to the success of our business.
We face many challenges and risks, including the possibility
that we might not successfully implement our operating
strategy and objectives, as a result of which there is a risk
that personnel who are integral to the success of our
business will leave, disrupting our ability to achieve short
and long-term goals. Although we have an equity-based
compensation plan and have retention agreements with key
employees and directors, we cannot assure you that these
measures will be effective to retain or attract key employees
and directors, which could materially hinder our ability to
successfully execute our operating strategy and objectives
and thus have a material adverse effect on our financial
position, results of operations and liquidity.
We face risks related to food safety.
The supply chain of growing, packaging and transporting
food from producers to retailers requires sourcing from
different suppliers worldwide. Although our food safety
policy covers the complete supply chain, from farm and
production level to our own operations, we may still face
food safety problems, including disruptions to our supply
chain caused by food-borne illnesses, or injuries caused by
food tampering or poor sanitary conditions. Instances of
food safety problems, real or perceived, whether at our food
retail stores or our foodservice facilities or those of our
competitors, could adversely affect the price and availability
of the affected food product and cause customers to shift
their preferences and may also result in product liability
claims and negative publicity about us or the food industry
in general, which could adversely affect our sales and our
results of operations.
Our business is subject to environmental liability risks
and regulations.
Our businesses are governed by environmental laws and
regulations in all the countries where we do business. These
laws and regulations also govern the discharge, storage,
handling and disposal of hazardous or toxic substances.
If stricter laws are passed or applicable environmental laws
are more strictly enforced, we may incur additional
expenditures. Our failure to comply with any environmental,
health or safety requirements, or any increase in the cost of
such compliance, could have a material adverse effect on
our financial position, results of operations and liquidity.
Ahold is a Dutch company and a foreign private issuer
and compared to a U.S. domestic issuer we are subject
to different principles of law, different disclosure
standards and different corporate governance standards
that may limit the rights of shareholders, the
information available to holders of our ADRs and the
transparency and independence of our Company.
As a consequence of our incorporation in the Netherlands,
our corporate affairs are governed by Dutch corporate law.
Principles of Dutch law relating to certain matters, including
the fiduciary duties of management and the rights of
shareholders, may differ from those that would apply if we
were incorporated in a jurisdiction within the U.S. As a
foreign private issuer, although we are subject to the
periodic reporting requirements under the Exchange Act,
the disclosure required of foreign private issuers under the
Exchange Act is more limited than disclosure required of
U.S. domestic issuers. As a result, there may be less
publicly available information about us than is regularly
published by or about other public companies in the U.S.
and such information may be made available later than
that of U.S. domestic issuers. As a foreign private issuer,
we are also exempt from some of the corporate governance
requirements of the NYSE that are applicable to U.S.
domestic companies listed on the NYSE. For more
information related to the corporate governance
requirements that apply to Ahold, see "Corporate
governance" in this annual report. In addition, certain of the
SEC's rules implementing the Sarbanes-Oxley Act provide
foreign private issuers with longer compliance transition
periods.
AHOLD ANNUAL REPORT 2005 45
