Notes: 21
146
Ahold Annual Report 2003
Financial Statements
Plan assets
The pension plan asset allocation in the U.S. on a weighted average basis at December 28, 2003 and December
29, 2002 is as follows:
Asset Category (in
2003
2002
Equity securities
52.0
54.0
Debt securities
36.0
39.0
Real estate
0.0
0.0
Other
12.0
7.0
Total
100.0
100.0
Ahold's pension assets are managed by outside investment managers and rebalanced periodically. The Committees
for the various U.S. plans establish investment policies and strategies and regularly monitor the performance of
the assets, including the selection of investment managers, setting long-term strategic targets and monitoring asset
allocations. Target allocation ranges are guidelines, not limitations, subject to variation from time to time, or as
circumstances warrant, and occasionally the Committees may approve allocations above or below a target range.
Ahold's investment strategy with respect to pension assets is to invest the assets in accordance with the
Employee Retirement Income Security Act of 1974 ("ERISA") and fiduciary standards. The long-term primary
objective for the plan assets are to protect the assets from erosion of purchasing power, and to provide for a
reasonable amount of long-term growth of capital, without undue exposure to risk. Currently the strategic targets
are 50-60% for equity securities, 35-40% for debt securities and 0-5% for other.
The pension plan asset allocation on a weighted average basis in Europe at December 28, 2003 and
December 29, 2002 is as follows:
Asset Category (In
2003
2002
Equity securities
47.0
48.0
Debt securities
36.0
40.0
Real estate
7.0
7.0
Other
10.0
5.0
Total
100.0
100.0
The investment strategy is based on the composition of the obligations of the pension fund. With the aid of Asset
Liability Management-models (ALM) analyses have been made of scenarios that could occur in the future. Based on
these analyses the investment portfolio is determined which is expected to produce a maximum return given a risk
that is acceptable to all parties involved. Less favorable years can be part of these scenarios. Currently the strategic
targets are 47.5% for equity securities, 40% for debt securities, 10% for real estate and 2.5% for other.
Expected return on plan assets
The expected return on plan assets is based on the current and projected investment portfolio mix of each plan.
The investments are related to their corresponding long-term yield rate, which depends on components like the
risk-free rate of return in real terms; expected inflation; and expected risk and liquidity premiums. In the U.S.,
actual long-term historical return information is also taken into account. The expected long-term rate of return
is determined as a weighted-average rate of return based on the asset allocation.
Cash flows
During 2003, the Company made cash contributions to fund the defined benefit plans of EUR 202 in the aggregate
compared to EUR 121 in 2002. For 2004, the Company expects contributions to be EUR 207 in the aggregate.
In the U.S., contributions are expected to rise from EUR 63 in 2003 to EUR 90 in 2004. The increase in cash
contributions is caused by the funding of a new plan at USF and the need to maintain required funding levels.
In Europe, the contributions are expected to decrease from EUR 139 to EUR 121. This decrease is caused by
a one-time additional contribution to the early retirement fund of EUR 30 in 2003.
