Zaandam, the Netherlands, December 18, 2020 – Ahold Delhaize announces today that its U.S. brand Stop & Shop, reached an agreement to terminate its participation in the United Food & Commercial Workers (UFCW) – Local 1500 Pension Fund (the “1500 Plan”), through a transaction that the 1500 Plan’s trustees determined to be in the best interests of the 1500 Plan’s participants and beneficiaries. The agreement improves the security of pension benefits for associates as well as reduces financial risk for the company. This transaction will not impact the previously issued outlook for 2020. This statement should not be interpreted as an update to any component of the previously issued 2020 outlook, announced in the Q3 2020 earnings release.
Stop & Shop will pay the 1500 Plan withdrawal liability of $225 million (~€184 million), on a pre-tax basis, to fulfill Stop & Shop’s obligations for past service for associates and retirees in the 1500 Plan. In addition, Stop & Shop expects to pay $4.1 million (~€3.4 million) to the defined contribution plan to provide transition benefits to certain plan participants who are near retirement. Stop & Shop will provide associates who are members of the UFCW Local 1500 future service retirement benefits through an existing defined contribution plan. Ongoing contributions to this defined contribution plan will have no significant impact to group financial results, as they will replace contributions that have been in place for the previous plan.
On an after-tax basis, the withdrawal liability and contribution to the transition reserve total approximately $173 million (~€141 million). The withdrawal liability will be satisfied by installment payments to the 1500 Plan over the next three years. Ahold Delhaize will therefore recognize a liability in these amounts, which will impact Q4 IFRS results. The liability will be excluded from underlying results and will therefore not impact the previously issued underlying operating results outlook for 2020. In 2020, $112.5 million (~€92 million) is expected to be paid, which is 50% of the settlement obligation. The Group’s full year 2020 free cash flow outlook, which is expected to be at least €1.7 billion, will not be impacted due to the strong level of free cash flow already generated in the year-to-date through Q3.
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Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause actual results of Koninklijke Ahold Delhaize N.V. (the “Company”) to differ materially from future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the risk factors set forth in the Company’s public filings and other disclosures. Forward-looking statements reflect the current views of the Company’s management and assumptions based on information currently available to the Company’s management. Forward-looking statements speak only as of the date they are made and the Company does not assume any obligation to update such statements, except as required by law.Back to index