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 001-12510
AHOLD USA, INC. 401(K) SAVINGS PLAN
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 (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
- ------------- ------------------------
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
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
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
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 by 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
Ahold USA, Inc. 401(k) Savings Plan
We have audited the accompanying statements of net assets available for
benefits of Ahold USA, Inc. 401(k) Savings Plan (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 its 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 2003 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
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 $646,084,404 $494,340,155
Loan to participants 18,979,935 18,686,368
------------ ------------
Total investments 665,064,339 513,026,523
CONTRIBUTIONS RECEIVABLE:
Employer 14,116,374 12,808,781
Other receivable 0 13,470
------------ ------------
Total assets 679,180,713 525,848,774
------------ ------------
LIABILITIES
Accrued expenses 3,533 58,354
Excess deferrals 506,942 488,459
------------ ------------
Total liabilities 510,475 546,813
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $678,670,238 $525,301,961
============ ============
See notes to financial statements.
-2-
AHOLD USA, INC. 401(k) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
- ----------------------------------------------------------------------------------------------------------------
2003 2002
ADDITIONS:
Participant contributions $ 47,904,525 $ 43,700,180
Employer contributions 14,466,202 12,888,751
Participant rollovers 2,977,091 3,611,952
Net investment income/(loss) from interest in Master Trust 104,014,991 (70,857,571)
------------ ------------
Total 169,362,809 (10,656,688)
------------ ------------
DEDUCTIONS:
Benefit payments 45,797,188 31,369,288
Administrative expenses 195,433 231,552
------------ ------------
Total 45,992,621 31,600,840
------------ ------------
Assets transferred from/(to) other plans--net 29,998,089 6,779,744
NET INCREASE/(DECREASE) 153,368,277 (35,477,784)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 525,301,961 560,779,745
------------ ------------
End of Year $678,670,238 $525,301,961
============ ============
See notes to financial statements.
-3-
AHOLD USA, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following brief description of the Ahold USA, Inc. 401(k) Savings Plan
(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 salaried employees.
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 $2,542,337. Effective October 1, 2001, the
assets for active salaried associates of the Peapod Inc. 401(k) Savings
Plan were transferred into the Plan. The amount of the assets transferred
was $1,502,171. 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/(to) other plans totaled $(1,400,510) for 2003 and
$1,141,855 for 2002. In August of 2002, Ahold sold several of its Tops
divisions. Assets transferred out of the Plan as a result of the sale
totaled $(1,277,261). Effective January 1, 2003, employees of Bruno's
Supermarkets, Inc. were added to the Plan. As a result, approximately 3,000
new participants entered the Plan, and approximately $36.9 million in
assets were transferred to the Plan from Bruno's Supermarkets, Inc.
Retirement Savings Plan. In December 2002, $6,915,150 was transferred and
the remaining assets of $31,398,599 were transferred to the Plan on January
2, 2003.
An employee is eligible to participate in the Plan after completing one
hour 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 of 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. In August 2, 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 assets of the Peapod Inc. 401(k) Savings Plan were merged into the
Trust. The amount of the assets merged was $1,590,069.
-4-
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 (the "IRS"). The Company matches 50% of a participant's
contribution, such that the participant's contributions do not exceed 6% of
eligible compensation. Individual companies may make additional matching
contributions on behalf of their eligible participants. Participant
contributions in excess of Plan or statutory limits are refunded to
participants and are included as excess deferrals on the statements of net
assets.
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.
Participant loans are stated at cost, which approximates fair value.
-5-
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 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 Magellan 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
=========== ===========
-6-
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
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 21,946,951 115,841,447 137,788,398
----------- ------------- -------------
Total $21,946,951 $ 116,067,481 $138,014,432
=========== ============= =============
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:
2003 2002
Ahold USA, Inc. 401(k) Savings Plan $104,014,991 $(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 $138,014,431 $(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
$195,433 for 2003 and $120,391 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
-8-
in ongoing discussions with the staff of the DOL in order to fully
ascertain the staff's position in these 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.
******
-9-
AHOLD USA, INC. 401(k) SAVINGS PLAN
SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
- --------------------------------------------------------------------------------
Identity of Description of Investment
Party-in- Issuer, Borrower, Including Maturity Date, Rate of
Interest to Lessor, or Similar Interest, Collateral, Par, Current
the Plan Party or Maturity Value Value
* Interest in Master Trust $ 646,084,404
* Loans to participants Various loans, bearing interest at
prime (prime plus 1% for loans
withdrawn prior to July 1, 2000),
maturities up to 15 years 18,979,935
----------------
Total $ 665,064,339
================
* Party-in-interest.
-10-
Exhibits
Exhibits Number Description of Documents
- --------------- ------------------------
1 Independent Auditor's Consent