SOURCES OF SUPPLIES
ENVIRONMENTAL MATTERS
GOVERNMENT REGULATION
U.S. regulations
JMR operated the following retail locations as of
December 31, 2005:
Square meters 1 I Stores
Pingo Doce 2 240 - 2,000 192
Feira Nova 1,230 - 10,040 29
Recheio Cash Carry 3 525 - 2,900 2
Total 223
1 The property data is presented in square meters, which may be converted to
square feet by multiplying the number of square meters by 10.75.
2 This includes 13 stores operated by Lidosol which is owned by Funchalgest,
SGPS, SA the latter a 50/50 joint venture between JMR, Gestao de Empresas de
Retalho, SGPS, S.A and Recheio Cash Carry SA
3 Both Recheio Cash Carry stores were operated through the Funchalgest joint
venture.
Our food retail and foodservice businesses purchase from
over 10,000 independent sources and our businesses are
not dependent on any individual supplier or supply contract.
Our purchases fall into one of two categories: for-resale
purchases and not-for-resale purchases. For-resale
purchases are those where the products purchased are
intended for resale to our customers. Not-for-resale
purchases are those where the products and services
purchased are not intended for resale to our customers.
For-resale purchases make up the majority of our purchases.
The for-resale sources of supply consist generally of
corporations selling brand name, A-brand and private
brand products, independent private brand suppliers and
perishable goods vendors. Products are purchased at
multiple levels within our organization, including at local
operating companies and regional and continental (U.S. and
European) purchasing organizations. We have been able to
organize most of the retail purchasing at a regional and
continental level.
Our operations are governed by environmental laws and
regulations in the countries in which we have operations,
including those concerning the discharge, storage, handling
and disposal of hazardous or toxic substances. We believe
that we possess all of the material permits required for the
conduct of our operations and that our current operations
are in material compliance with all applicable environmental
laws and regulations.
We use hazardous substances and generate hazardous
wastes in some of our operations. Under the U.S. Federal
Comprehensive Environmental Responsibility, Compensation
and Liability Act ("CERCLA") and similar state laws,
generators of hazardous wastes may be jointly and severally
liable for the clean-up of releases of hazardous wastes from
the facilities to which the generator sent those wastes for
disposal. However, we are not aware of any asserted or
threatened claims against us relating to any such offsite
disposal location.
Clean-up of hazardous substances or petroleum releases to
soil or groundwater is taking place at certain of our facilities.
At other of our facilities, studies have shown that soil and
groundwater have been impacted by gasoline or petroleum
constituents. The relevant regulatory agencies have,
however, not required remediation at those sites. In
addition, certain of our facilities are located on premises
that are currently or were formerly gasoline stations or other
industrial sites at which contamination from prior operations
may be located, but there have been no environmental
investigations to determine the condition of those sites.
Having reviewed the applicable law, the terms of
indemnification agreements with the previous operators of
the facilities or the terms of our leases with the property
owners or our tenants, we believe that some of the clean-up
costs associated with the facilities described in this
paragraph will be allocated to prior owners or operators of
those facilities or to the current owners or tenants of the
properties upon which the facilities are located. We do not
believe that any clean-up costs associated with those
facilities that are allocated to us will materially impact
our financial position.
As a marketer and distributor of food products in the U.S.,
we are subject to regulation by numerous federal, state and
local regulatory agencies. At the federal level, we are subject
to the Federal Food, Drug and Cosmetic Act, the
Bioterrorism Act and regulations promulgated by the U.S.
Food and Drug Administration (the "FDA"). The FDA
regulates manufacturing and holding requirements for foods,
over-the-counter drug products and pharmaceuticals,
specifies the standards of identity for certain foods and
prescribes the format and content of certain information
required to appear on food product labels.
For certain product lines, we are also subject to the Federal
Meat Inspection Act, the Poultry Products Inspection Act,
the Perishable Agricultural Commodities Act, the Country of
Origin Labeling Act and regulations promulgated thereunder
by the U.S. Department of Agriculture (the "USDA"). The
USDA imposes standards for product quality and sanitation,
including the inspection and labeling of meat and poultry
AHOLD ANNUAL REPORT 2005 51
