UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 011-12510
AHOLD USA, INC. 401(K) SAVINGS PLAN FOR UNION ASSOCIATES
Stop & Shop Supermarket Company, Inc.
1385 Hancock St.
Quincy, MA 02169
(Full title and address of plan)
KONINKLIJKE AHOLD N.V. (publ)
Albert Heijnweg 1
1507 EH Zaandam
The Netherlands
(Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office)
The Ahold USA, Inc. 401(k) Savings Plan for Union Associates (the "Plan")
is subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Therefore, in lieu of Items 1-3 of Form 11-K, the statements of net
assets available for benefits as of December 31, 2003 and 2002, and the related
statements of changes in net assets available for benefits for each of the two
years in the period ended December 31, 2003 and schedule, which have been
prepared in accordance with the financial reporting requirements of ERISA, are
attached hereto as Appendix 1 and incorporated herein by reference.
Exhibits
Exhibit Number Description of Documents
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1 Independent Auditor's Consent
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this Annual Report to be signed on its behalf by the undersigned hereunto
duly authorized.
AHOLD USA, INC. 401(K) SAVINGS PLAN
FOR UNION ASSOCIATES
By: AHOLD U.S.A., INC.
As Plan Administrator
By: / s / Ward Kraemer
-----------------------------------------------
Name: Ward Kraemer
Title: Vice President, Retirement Plans
and Executive Compensation
Date: November 2, 2004
Appendix 1
Ahold USA, Inc.
401(k) Savings Plan
for Union Associates
Financial Statements as of and for the
Years Ended December 31, 2003 and 2002,
Supplemental Schedule as of December 31, 2003,
and Report of Independent Registered Public Accounting Firm
AHOLD USA, INC. 401(k) SAVINGS PLAN
FOR UNION ASSOCIATES
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS
ENDED DECEMBER 31, 2003 AND 2002:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2003:
Schedule H, Part IV, Line 4i - Schedule of Assets
(Held at End of Year) 10
Schedules required under the Employee Retirement Income Security Act
of 1974, other than the schedule listed above, are omitted because
of the absence of the conditions under which they are required.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Plan Administrator and Participants of
Ahold USA, Inc. 401(k) Savings Plan for Union Associates:
We have audited the accompanying statements of net assets available for benefits
of Ahold USA, Inc. 401(k) Savings Plan for Union Associates (the "Plan") as of
December 31, 2003 and 2002, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2003 and 2002, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This schedule is the responsibility of the Plan's management. This
schedule has been subjected to the auditing procedures applied in our audit of
the basic 2002 financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic 2003 financial
statements taken as a whole.
As discussed in Note 7 to the financial statements, certain activities of the
Plan's sponsor, its owner, and affiliates (and their current and former
directors, officers, and employees) with respect to the Plan and its operations,
are the subject of ongoing investigations by various governmental and regulatory
entities.
[GRAPHIC OMITTED] Deloitte & Touche LLP
McLean, Virginia
June 25, 2004 (October 13, 2004, as to Note 7)
AHOLD USA, INC. 401(k) SAVINGS PLAN
FOR UNION ASSOCIATES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003 AND 2002
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ASSETS 2003 2002
INVESTMENTS--At fair value:
Interest in Master Trust $ 65,027,315 $ 46,351,165
Loans to participants 2,814,848 2,303,967
------------- ------------
Total investments 67,842,163 48,655,132
CONTRIBUTIONS RECEIVABLE:
Employer 5,353 23,880
Participant 0 4,684
------------- ------------
Total assets 67,847,516 48,683,696
LIABILITIES
ACCRUED EXPENSES 3,533 0
------------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 67,843,983 $ 48,683,696
============= ============
See notes to financial statements.
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AHOLD USA, INC. 401(k) SAVINGS PLAN
FOR UNION ASSOCIATES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2003 AND 2002
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2003 2002
ADDITIONS:
Participant contributions $11,572,499 $12,505,016
Employer contributions 9,870 215,214
Net investment income/(loss) from interest in Master Trust 10,167,425 (7,032,610)
Other 23,064 0
----------- -----------
Total additions 21,772,858 5,687,620
----------- -----------
DEDUCTIONS:
Benefit payments 3,836,088 7,065,754
Administrative expenses 63,207 97,293
----------- -----------
Total deductions 3,899,295 7,163,047
----------- -----------
Assets transferred from/(to) other plans--net 1,286,724 (7,821,465)
NET INCREASE (DECREASE) 19,160,287 (9,296,892)
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 48,683,696 57,980,588
----------- -----------
End of year $67,843,983 $48,683,696
============ ===========
See notes to financial statements.
- 3 -
AHOLD USA, INC., 401(k) SAVINGS PLAN
FOR UNION ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
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1. DESCRIPTION OF THE PLAN
The following brief description of the Ahold USA, Inc., 401(k) Savings
Plan for Union Associates (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan Agreement for more
complete information.
General--The Plan is a defined contribution plan that was adopted by Ahold
USA, Inc. (the "Company") effective July 1, 1997 to provide tax deferred
savings to the Company and its subsidiaries' eligible hourly employees who
are covered by collective bargaining agreements. Effective July 1, 2000,
all of the assets of the Tops Markets Inc. Investment Savings Plan #003
were transferred into the Plan. The amount of assets transferred was
$15,707,466. In August 2001, the Company acquired certain stores of Grand
Union from C&S Wholesale Grocers. The employees of Grand Union were
offered the opportunity to transfer their accounts from their plan with
Grand Union to the Ahold USA, Inc. 401(k) Savings Plan Master Trust. Total
assets transferred into the Plan were $7,811. Effective October 1, 2001,
the assets for union associates of the Peapod Inc. 401(k) Savings Plan
were transferred into the Plan. The amount of the assets transferred was
$3,226. Additionally, assets may be transferred into or between related
plans of the Company in connection with a change in an eligible employee's
employment status (i.e., salaried, hourly, or union). Such transfers from
other plans totaled $1,286,724 for 2003, and $284,382 for 2002. In August
2002, the three Tops divisions were sold to another company. Assets
transferred out of the Plan as a result totaled $8,105,847.
An employee is eligible to participate in the Plan after completing 1,000
hours within one year of service commencing at the employee's start date,
and attainment of age 21. The Plan is a defined contribution plan subject
to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
The Ahold USA Pension Committee approved an amendment number 6 to the Plan
to effectuate the permanent suspension of investing in the Ahold American
Depository Receipts ("ADR") Fund, effective December 4, 2003.
Master Trust--Effective July 1, 1997, the Ahold USA, Inc. 401(k) Savings
Plan Master Trust (the "Trust") was established to serve as the funding
medium for the Plan. Fidelity Management Trust Company (the "Trustee") was
appointed by the Company to hold, administer, and invest the assets of the
Trust. The Trust is also the funding medium for other Company-sponsored
employee benefit plans. Each of the plans participating in the Master
Trust has a proportionate and undivided ownership interest in the Master
Trust assets. Effective July 1, 2000, all of assets of the Tops Markets
Inc. Investment Savings Plan #003 merged into the Ahold USA, Inc., 401(k)
Savings Plan Master Trust. The amount of the assets merged was
$15,707,466. In August 2001, the Company acquired certain stores of Grand
Union from C&S Wholesale Grocers. The employees of Grand Union were
offered the opportunity to transfer their accounts from their plan with
Grand Union to the Ahold USA, Inc. 401(k) Savings Plan Master Trust. Total
assets transferred into the Trust were $4,565,967. Effective October 1,
2001, all the
- 4 -
assets of the Peapod Inc. 401(k) Savings Plan merged into the Ahold USA,
Inc. 401(k) Savings Plan Master Trust. The amount of the assets merged was
$1,590,069.
Administration--All administrative expenses associated with the Plan are
paid by the Plan, except for the costs of Company employees responsible
for Plan administration, which are paid by the Company.
Contributions--A participant may elect to make pretax contributions to the
Plan in an amount ranging from 1% to 18% (25% for non-highly compensated
participants) of the participant's compensation (consisting of total
earnings including overtime, bonuses, and other special allowances, as
defined) up to a maximum amount established annually by the Internal
Revenue Service ("IRS"). The Company, based upon the contracts negotiated
with the unions for the various operating units, matches 50% of a
participant's contribution as required by the union contracts such that
the participants' contributions do not exceed 6% of the participants
eligible compensation. Individual companies may make additional matching
contributions on behalf of their eligible participants.
Investments--Participants direct the investment of their contributions
into various investment options offered by the Plan.
Participant Accounts--Each participant's account is credited with the
participant's contribution and allocations of (a) the Company's
contribution, (b) Plan earnings (losses), (c) forfeitures of participant's
nonvested accounts, and (d) an allocation of administrative expenses.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
Vesting--A participant vests in the Company contribution at a rate of 20%
for each year a participant works at least 1,000 hours. Employee
contributions are fully vested. Forfeited balances of terminated
participants are used to reduce future contributions by the Company.
Loans to Participants--A participant is eligible to borrow from the Plan
after participating in the Plan for at least one year. The minimum loan
amount is $1,000 and may not exceed the lower of $50,000 or 50% of the
participant's vested account balance. Each loan is secured by the
participant's account and bears interest at prime (4.00% at December 31,
2003), adjusted monthly. Loans are repaid through payroll withholdings
over terms of 6 months to 15 years.
Payment of Benefits--A participant's account may be withdrawn upon
attainment of age 59 1/2, retirement, death, or termination of employment.
At such time, the participant is entitled to receive the entire value of
his or her account either as a lump-sum amount or annual installments over
a ten-year period.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting--The accompanying financial statements are prepared
under the accrual basis of accounting that is in accordance with
accounting principles generally accepted in the United States of America.
Investment Valuation and Income Recognition--Interest in the Master Trust
is stated at fair market value as determined by the Trustee, based on
quoted market prices of the underlying assets. The Plan utilizes various
investment instruments. Investment securities, in general, are exposed to
various risks such as interest rate, credit, and overall market
volatility. Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the values of
investment securities will occur in the near term and that such changes
could materially affect the amounts reported in the statements of net
assets available for plan benefits.
-5-
Participant loans are stated at cost, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
Use of Estimates--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of net assets available for benefits, changes
therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Expenses--Administrative expenses associated with the Plan are paid by the
Plan, except for the costs of Company employees responsible for the Plan
administration, which are paid by the Company.
Payment of Benefits--Benefit payments to participants are recorded upon
distribution.
3. MASTER TRUST
The Plan's interest in the assets of the Master Trust is included in the
accompanying statements of net assets available for benefits. A summary of
the assets of the Master Trust as of December 31, 2003 and 2002, is as
follows:
2003 2002
Ahold Company Stock Fund $ 11,793,738 $ 9,044,712
Fidelity Diversified International Stock Fund 17,739,116 10,359,990
Fidelity Equity Income Fund 33,483,194 24,993,421
Fidelity Freedom Income Fund 2,374,963 1,618,513
Fidelity Freedom 2000 Fund 2,606,219 2,056,821
Fidelity Freedom 2010 Fund 7,869,893 5,115,824
Fidelity Freedom 2020 Fund 8,632,747 4,821,981
Fidelity Freedom 2030 Fund 7,523,177 4,191,042
Fidelity Freedom 2040 Fund 1,553,760 488,235
Fidelity Growth & Income Fund 112,230,199 96,120,746
Fidelity Low-Priced Stock Fund 64,584,218 41,689,208
Fidelity Magellan Fund 69,278,214 51,980,005
Fidelity Managed Bond Fund 57,021,925 50,996,866
Fidelity Managed Income Portfolio II Class 3 Fund 224,797,206 201,902,354
Fidelity Puritan Fund 72,725,131 59,105,055
Janus Twenty Fund 0 34,759,628
Janus Worldwide Fund 0 42,818,546
Lord Abbett Development Growth 16,432,004 8,511,318
RBC Mid Cap Equity 1 4,031,794 0
Fidelity Blue Chip 3,199,494 0
Msift Value Adviser 0 5,585,616
Mutual Discovery Z 55,640,162 0
H&W Mid Cap Val 1 16,460,626 0
Spartan U.S. Equity Index Fund 44,326,332 32,278,258
Janus Adv. Cap. Appr I 45,542,534 50
MFS Value Fund A 7,134,807 4,265,387
------------ ------------
$886,981,453 $692,703,576
============ ============
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Allocations of assets of the Master Trust to participating plans as of
December 31, 2003 and 2002, are as follows:
2003 Amount Percent
Ahold USA, Inc. 401(k) Savings Plan $ 646,084,404 73 %
Ahold USA, Inc. 401(k) Savings Plan for Hourly Associates 175,869,734 20 %
Ahold USA, Inc. 401(k) Savings Plan for Union Associates 65,027,315 7 %
------------- ---
$ 886,981,453 100 %
============= =====
2002 Amount Percent
Ahold USA, Inc. 401(k) Savings Plan $ 494,340,155 71 %
Ahold USA, Inc. 401(k) Savings Plan for Hourly Associates 152,012,256 22 %
Ahold USA, Inc. 401(k) Savings Plan for Union Associates 46,351,165 7 %
------------- ---
$ 692,703,576 100 %
============== =====
Net investment income/(loss) of the Master Trust for the years ended
December 31, 2003 and 2002, is as follows:
Net Appreciation
Total (Depreciation) in Net
Interest and Fair Value of Investment
Dividends Investments Income/(Loss)
2003
-------------------------------------------------------------
Ahold Company Stock Fund $ 0 $ 226,034 $ 226,034
Mutual Funds 21,946,651 115,841,447 137,788,098
----------- ------------- ------------
Total $21,946,651 $ 116,067,481 $138,014,132
=========== ============= ============
2002
-------------------------------------------------------------
Ahold Company Stock Fund $ 0 $ (7,876,656) $ (7,876,656)
Mutual Funds 18,776,502 (100,320,662) (81,544,160)
---------- ------------- -------------
Total $18,776,502 $(108,197,318) $(89,420,816)
=========== ============== ==============
Investment earnings of the Master Trust are allocated according to each
plan's balance in relation to the total Master Trust fund balance.
Allocations of net investment income/(loss) of the Master Trust to the
participating plans for the years ended December 31, 2003 and 2002, are as
follows:
Ahold USA, Inc. 401(k) Savings Plan $104,014,992 $(70,857,571)
Ahold USA, Inc. 401(k) Savings Plan for Hourly Associates 23,832,015 (11,530,635)
Ahold USA, Inc. 401(k) Savings Plan for Union Associates 10,167,425 (7,032,610)
------------ -------------
Total $138,014,432 $(89,420,816)
============= =============
- 7 -
4. PLAN TERMINATION
The Company has the right under the Plan, although it has not expressed
any intent to do so, to discontinue its contributions at any time and to
terminate the Plan subject to the provisions set forth in ERISA. In the
event of Plan termination, all participants' accounts will become fully
vested.
5. RELATED PARTY TRANSACTIONS
Certain plan investments are shares of mutual funds managed by affiliates
of Fidelity Management Trust Company, the trustee as defined by the Plan.
Therefore, these transactions qualify as party-in-interest transactions.
Fees paid by the Plan for the investment management services amounted to
$63,207 for 2003 and $97,293 for 2002.
6. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Plan by a
letter dated May 22, 2002, that the Plan and related Trust are designed in
accordance with applicable sections of the Internal Revenue Code. The plan
administrator and the Plan's tax counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code and the Plan; thus the related
Trust continues to be tax-exempt. Therefore, no provision for income taxes
has been included in the Plan's financial statements.
7. LITIGATION AND GOVERNMENTAL/REGULATORY INVESTIGATIONS
On February 24, 2003 the Company's parent, Royal Ahold ("Ahold"),
announced, among other things, that it would be restating its earnings for
the fiscal year 2001 and the first three quarters of the fiscal year 2002,
because of certain accounting irregularities at one of its operating
subsidiaries, U.S. Foodservice, Inc. ("U.S. Foodservice"), and that the
historical financial statements of Ahold would have to be restated because
certain other subsidiaries had been improperly consolidated (the "February
24 Announcement"). Following the February 24 Announcement, the United
States Attorney for the Southern District of New York (the "U.S.
Attorney") commenced a grand jury criminal investigation relating to
possible wrongdoing, and the United States Securities & Exchange
Commission ("SEC") commenced a civil investigation relating to possible
violations of U.S. securities laws, by Ahold, its subsidiaries, including
the Company, and certain of their respective current and former officers,
directors and employees in connection with the events leading to the
February 24 Announcement and other accounting-related matters. With
respect to the SEC civil investigation, the SEC announced on October 13,
2004, as part of an overall settlement agreement, that it would not seek a
penalty from Ahold because of, among other reasons, the Company's
extensive cooperation with the Commission's investigation. In addition,
following the February 24 Announcement, United States Department of Labor
("DOL") opened both civil and criminal investigations into whether any
violations of ERISA were committed by Ahold and certain of its current and
former officers, directors and employees in connection with the 401(k)
retirement savings plan of Ahold USA, Inc. In the course of the DOL
criminal investigation, which is also being coordinated with the U.S.
Attorney's investigation, a letter request, dated July 9, 2003, was issued
by the DOL relating to the Plan. With respect to the DOL civil
investigation, Ahold received a letter closing the case on June 18, 2004.
The DOL did not issue a fine to Ahold. The DOL noted that Ahold needed to
improve processes with respect to the production of the Form 5500 and plan
expenses. With respect to the DOL criminal investigation, the Company is
fully cooperating with the investigation and has reached an agreement with
the DOL regarding the production of documents in response to the letter
request. Additionally, the Company's legal counsels are involved in
ongoing discussions with the staff of the DOL in order to fully ascertain
the staff's position in these
- 8 -
matters. In view of the nature and stage of those discussions, the Company
cannot at this point predict when the investigation will be completed,
whether the Company will actually be charged with or convicted of any
violation of law or whether any fines will be imposed upon the Company or
what the final amount of such fines would be or what actions, if any, the
Company will be required to take with respect to the Plan.
Following the February 24 Announcement, numerous putative class actions
claiming violations of Section 10(b) of the Securities & Exchange Act of
1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder and
Section 20(a) of the Exchange Act (collectively, the "Securities Action")
were filed on behalf of Ahold's stockholders. Additionally, two class
actions were also filed on behalf of participants in the 401(k) retirement
savings plan of Ahold USA, Inc. against Ahold, Ahold USA, Inc. and certain
of Ahold's and its subsidiaries' respective current and former officers,
directors and employees and one on behalf of the participants in the
401(k) retirement savings plan of U.S. Foodservice against U.S.
Foodservice and certain of its current and former officers, directors and
employees alleging violations of ERISA (collectively, the "ERISA
Actions"). To date, this litigation does not yet involve any claims
relating to the Plan. Due to the early stages of this litigation, however,
the Company is unable to predict whether the likelihood of an adverse
judgment against the Company is either probable or remote. Further, in the
event of an adverse judgment, the Company is unable to predict the amount
of damages the Company would face as result of such a judgment.
******
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AHOLD USA, INC 401(k) SAVINGS PLAN
FOR UNION ASSOCIATES
SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
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Party- Identity of Description of Investment,
in-Interest Issuer, Borrower, Including Maturity Date, Rate of
to Lessor, or Similar Interest, Collateral, Par Current
the Plan Party or Maturity Value Value
* Interest in Master Trust $65,027,315
* Loans to participants Various loans, bearing interest at prime
prime (and prime plus 1% for loans
withdrawn prior to July 1, 2000), 2,814,848
maturities up to 15 years
-----------
Total $67,842,163
===========
* Party-in-interest.
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Exhibits
Exhibit Number Description of Documents
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1 Independent Auditor's Consent