updated 11/28/2005 8:08:43 AM ET 2005-11-28T13:08:43

Dutch retailer Ahold NV said Monday it has agreed to pay $1.1 billion to settle a class action lawsuit brought by shareholders in the United States after the company's 2003 accounting scandal.

Ahold said the settlement would avoid costly court cases and the company had "attempted to make fair restitution without endangering the continuity of the company or its business strategy for the coming years."

A company statement said the settlement represented the last "significant" civil case it faces in the scandal, in which Ahold overstated earnings by more than 1 billion euros between 1999 and 2002, mostly by inflating sales at its U.S. Foodservice subsidiary.

The company eventually restated earnings for 2002 to a $5.01 billion loss and went to the brink of bankruptcy. It was saved by selling assets and by an emergency credit line from its banks.

Since 2003, Ahold has gradually regained firm financial footing, and posted a net profit of 130 million euros ($162 million) in the second quarter on sales of 10.4 billion euros ($13 billion).

The company said it will take a 585 million euro ($687 million) charge related to the settlement when it presents third-quarter results on Nov. 29.

Ahold's debt is 6.1 billion euros ($7.6 billion), half of analysts' estimates at the height of the company's crisis in 2003.

The Securities and Exchange Commission has already settled civil fraud charges against Ahold and top executives without fining them. Criminal cases continue.

Two former top managers at Columbia, Md.-based U.S. Foodservice pleaded guilty to fraud charges in the United States, while the former chief financial officer and chief marketing officer have pleaded not guilty.

Former Ahold Chief Executive Cees Van der Hoeven, former Chief Financial Officer Michiel Meurs and two other top executives are expected to face criminal charges in the Netherlands in May 2006. All have said they are not guilty of wrongdoing.

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