Royal Ahold overstates earnings by $500 million
Feb 25, 2003 12:00 PM, staff and wire reportsRoyal Ahold NV, the Netherlands-based supermarket and foodservice operator with major holdings in the United States, disclosed Feb 24, 2003, that operating earnings for fiscal year 2001 and expected operating earnings for fiscal year 2002 were overstated by an amount that the company believes may exceed $500 million.
Overstatements of income discovered to date will require the restatement of Ahold’s financial statements for fiscal year 2001 and the first three quarters of fiscal year 2002.
In response to the disclosure of Ahold’s true financial condition, its American Depository Receipts (ADRs) plummeted from a Feb 21, 2003, close of $10.69 to as low as $3.60 per ADR when trading resumed Feb 24, 2003. The decline represents a one-day loss of more than 65%.
In light of the disclosure, Ahold President and Chief Executive Officer Cees van der Hoeven and Chief Financial Officer Michael Meurs will resign.
The law firm of Berger & Montague PC filed a class action lawsuit Feb 25, 2003, against Royal Ahold and certain of its officers, in the United States District Court for the Eastern District of Virginia on behalf of all who purchased Ahold ADRs from Jan 8, 2002 through Feb 21, 2003. Also included in the suit are those US citizens who purchased Ahold common stock on foreign exchanges during the class period.