46
Compliance and regulatory
Ahold
Annual Report 2011
Groupata glance
Performance
(Governance
Financials
Investors
How we manage risk continued
Ahold's pension plans covering its Dutch operations are regulated by Dutch pension law.
The pension fund is under the supervision of the Dutch Central Bank (De Nederlandsche Bank
or DNB) and the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten or AFM).
According to the law and or contractually agreed funding arrangements, Ahold may be required
to make additional contributions to its pension plans in case minimum funding requirements are
not met.
In addition, U.S. health care costs have risen significantly in recent years and this trend may
continue. Ahold may be required to pay significantly higher amounts to fund U.S. employee health
care plans in the future. Significant increases in health care and pension funding requirements
could have a material adverse effect on the Company's financial position, results of operations,
and liquidity.
Other financial risks include:
Foreign currency translation risk arising from various currency exposures, primarily with respect
to the U.S. dollar, relating to cash flows, including loan and interest payments, lease payments,
dividends and firm purchase commitments, and the value of assets and liabilities denominated
in foreign currency
Credit risk related to cash and cash equivalents, short-term deposits, and derivative financial
instruments
Interest rate risk, arising primarily from debt
For further information relating to these financial risks, see Note 30to the consolidated financial
statements, which are incorporated and repeated here by reference.
Risks related to unforeseen tax liabilities
Because Ahold operates in a number of countries, its income is subject to taxation in differing
jurisdictions and at differing tax rates. Significant judgment is required in determining the
consolidated income tax position. We seek to organize our affairs in a tax-efficient and balanced
manner, taking into account the applicable regulations of the jurisdictions in which we operate.
As a result of Ahold's multi-jurisdictional operations, it is exposed to a number of different tax risks
including, but not limited to, changes in tax laws or interpretations of such tax laws. The tax
authorities in the jurisdictions where Ahold operates may audit the Company's tax returns and
may disagree with the positions taken in those returns. An adverse outcome resulting from any
settlement or future examination of the Company's tax returns may result in additional tax
liabilities and may adversely affect its effective tax rate, which could have a material adverse
effect on Ahold's financial position, results of operations, and liquidity. In addition, any
examination by the tax authorities could cause Ahold to incur significant legal expenses
and divert management's attention from the operation of its business.
Risks related to the legislative and regulatory environment and litigation
Ahold and its businesses are subject to various federal, regional, state, and local laws and
regulations in each country in which we operate relating to, among other areas, zoning, land use,
antitrust restrictions, work place safety, public health including food and non-food safety,
environmental protection, alcoholic beverage sales, pharmaceutical sales, and information
security. Ahold and its businesses are also subject to a variety of laws governing our relationship
with employees, including but not limited to minimum wage, overtime, working conditions, health
care, disabled access, and work permit requirements. The cost of compliance with, or changes
in, any of these laws could impact the operations and reduce the profitability of Ahold or its
businesses and thus could affect Ahold's financial condition, or results of operations. Ahold and
its businesses are also subject to a variety of antitrust and similar laws and regulations in the
jurisdictions in which we operate which may impact or limit Ahold's ability to realize certain
acquisitions, partnerships or mergers.
