Ahold Annual Report

Ahold Annual Report 20042004 Ahold Annual Report 2004 P.O. Box 3050 1500 HB Zaandam The Netherlands Telephone: +31 75 659 91 11 Fax: +31 75 659 83 50 Zaandam Trade Register No. 35000363 www.ahold.com 312607_Ahold_Cover_ENG.indd 1 14-04-2005 14:05:35 Brands of Our Group For information: Ahold Investor Relations Telephone: +31 75 659 58 28 Fax: +31 75 659 83 59 E-mail: [email protected] Ahold Corporate Communications Telephone: +31 75 659 57 20 Fax: +31 75 659 83 60 E-mail: [email protected] P.O. Box 3050 1500 HB Zaandam The Netherlands Telephone: +31 75 659 91 11 With over 200,000 associates and 2004 consolidated Fax: +31 75 659 83 50 net sales of approximately EUR 52 billion, we are one Zaandam Trade Register No. 35000363 of the world’s leading food providers. Design & Realization: Dart Design, Amsterdam Printed by: Hollandia Printing, Heerhugowaard www.ahold.com 312607_Ahold_Cover_ENG.indd 2 14-04-2005 14:05:46 Ahold Annual Report 2004 Ahold, delivering value, driven by values 1 Ahold encompasses an international group of local food retail and foodservice operators that do business under their own brand names. Each week our Company meets the needs of millions of customers, primarily in the United States and Europe. With over 200,000 associates and 2004 consolidated net sales of approximately EUR 52 billion, we are one of the leading food providers in the United States and the most prominent food retailer in the Netherlands. We act for our customers Our customers have been our lifeblood for the last 118 years. We endeavor to earn our customers’ loyalty by delivering value and creating the best overall place to shop. We strive to make every day a little easier for our customers, bringing them interesting and innovative shopping experiences. We are actively engaged in helping the communities we serve. We value our diversity We value the richness of our diversity and respect one another for who we are, how we think and what we contribute. We are committed to developing our associates. We place a high priority on open, honest communication with all of our stakeholders. We have a passion for our business We love being in the food business. We love satisfying our customers’ daily needs. We cooperate to leverage our capabilities, our scale, our strength and our knowledge. We use our know-how to differentiate ourselves and create what we believe is an outstanding customer experience. We are never satisfied in our search for excellence and customer convenience: easy in, easy shop, easy out. 312607_001-017.indd 1 14-04-2005 14:07:56 Ahold Annual Report 2004 2 Contents General Information 3 Financial Highlights 4 Message from the Corporate Executive Board 8 Message from the Supervisory Board 14 Remuneration 18 Corporate Governance 22 Risk Factors 32 Business Overview 38 Management’s Discussion & Analysis 48 Financial Statements 93 Investor Relations 221 Cross-reference to Form 20-F and Additional Required Information 226 Board and Management 239 Forward-looking Statements Notice 240 312607_001-017.indd 2 14-04-2005 14:07:58 Ahold Annual Report 2004 General Information 3 InIntroduction dit hoofdstuk worden de zaken besproken die wij vanbelang vinden voor een goed begrip vanKoninklijke de financiële Ahold positieenN.V. is a publicde bedrijfsresultaten limited liability overcompany de drie registered boekjaren in eindigendthe Netherlands op 28with december listings of 2003. shares Operationele or depositary en shares financiële on the gang Amsterdam, van zaken Newen vooruitzichten. York, London, Zurich and several German stock exchanges. This is Ahold’s annual report for the fiscal year ended Each of these years included 52 weeks, except for 2004, January 2, 2005 in accordance with Dutch regulations. which had 53 weeks. For Ahold and those subsidiaries with It also forms a substantial part of our Form 20-F which will a 53-week fiscal year in 2004, the results of operations for be filed with the U.S. Securities and Exchange Commission. 2004 were affected by the inclusion of the additional one- Cross references to the Form 20-F are set out in the week period in 2004 compared to the prior four fiscal years. “Cross-reference to Form 20-F and Additional Required Information” section. This annual report is available in The fiscal year for our subsidiary U.S. Foodservice is also Dutch and English. Should differences in interpretation a 52- or 53-week year with its fiscal year ending on the arise, the English version prevails. Saturday closest to December 31 of each calendar year. The fiscal year of our operations in Central Europe, Spain In this annual report, “we,” “us,” “our,” the “Company,” and South America ends on December 31 of each and “Ahold” refer to Koninklijke Ahold N.V. together with calendar year. its consolidated subsidiaries, unless the context indicates otherwise. We prepared our consolidated financial Currencies statements included in this annual report in accordance We are domiciled in the Netherlands, which is one of the with accounting principles generally accepted in the member states of the European Union (the “European Netherlands (“Dutch GAAP”) and we reconcile to accounting Union” or the “EU”) that has adopted the Euro (“EUR”) as principles generally accepted in the U.S. (“US GAAP”). its currency. Accordingly, we have adopted the Euro as our reporting currency. As a significant portion of our business Separate financial statements and notes thereto for our is based in the U.S., exchange rate fluctuations between current joint ventures have not been included in this annual the Euro and the U.S. dollar (“dollar,” “U.S. dollar” or report. These separate financial statements may be “USD”) are among the factors that have influenced year-to- required to be filed with the SEC in accordance with year comparability of our consolidated results of operations Rule 3-09 of Regulation S-X. If such financial statements and financial position. are required to be filed we intend to file these separate financial statements as an amendment to our annual report Use of non-GAAP financial measures on Form 20-F once these financial statements have been In certain instances, we present our results of operations completed in a form that is appropriate for such filing. in local currencies, which Ahold’s management believes provides a better insight into the operating performance This annual report includes forward-looking statements that of our foreign subsidiaries. involve risk and uncertainties that are discussed more fully in the “Forward-looking Statements Notice” section included We use certain other non-GAAP financial measures in this in this annual report. annual report. These financial measures are not prepared in accordance with Dutch GAAP or US GAAP. These Fiscal year reporting non-GAAP financial measures should not be viewed as Our fiscal year consists of 52 or 53 weeks and ends on alternatives to the equivalent Dutch GAAP or US GAAP the Sunday nearest to December 31 of each calendar year, measure and should be considered in addition to, but not with each subsequent fiscal year beginning on the following as substitutes for, the most directly comparable Dutch Monday. Our fiscal year-end dates for the past five fiscal GAAP or US GAAP measure. years were: • January 2, 2005, • December 28, 2003, • December 29, 2002, • December 30, 2001 and • December 31, 2000. 312607_001-017.indd 3 14-04-2005 14:07:58 Ahold Annual Report 2004 4 Financial Highlights Exchange rates The following table sets forth, for the years indicated, certain information concerning the exchange rate of the U.S. dollar relative to the Euro, expressed in U.S. dollar per Euro based on the rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the “noon buying rate”): Year Period End Average High Low 2000 0.9424 0.9207 1.0335 0.8270 2001 0.8836 0.8950 0.9535 0.8370 2002 1.0438 0.9441 1.0438 0.8594 2003 1.2429 1.1299 1.2597 1.0361 2004 1.3538 1.2487 1.3625 1.1801 The rates used in the preparation of our consolidated financial statements may vary in certain minor respects from the noon buying rate. The following table sets forth the high and low noon buying rates of the U.S. dollar against the Euro for each of the last six months. The noon buying rate of the U.S. dollar against the Euro as of April 5, 2005, was USD 1.2842 = EUR 1. High Low October 2004 1.2783 1.2271 November 2004 1.3288 1.2703 December 2004 1.3625 1.3224 January 2005 1.3476 1.2954 February 2005 1.3230 1.2773 March 2005 1.3465 1.2877 April 2005 (through April 5) 1.2896 1.2838 Fluctuations in the exchange rates between the U.S. dollar and the Euro have affected the U.S. dollar equivalent of the Euro prices of our common shares on the Official Segment of Euronext Amsterdam N.V.’s stock market (“Euronext Amsterdam” or “Euronext”) and, as a result, are likely to have affected the market price of our American Depositary Shares (“ADSs”) listed on the New York Stock Exchange (the “NYSE”). Such fluctuations will also affect the U.S. dollar amounts received by holders of our ADSs on conversion by The Bank of New York, as depositary (the “Depositary”), of cash dividends, if any, paid in Euros on the common shares represented by the ADSs. 312607_001-017.indd 4 14-04-2005 14:08:03 Ahold Annual Report 2004 5 Selected financial data The selected financial data below should be read in conjunction with our consolidated financial statements included in this annual report.

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