Principles of Consolidation
00 Ahold ANNUAL REPORT 2002 95
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
incidental revaluation of properties with an offsetting entry to the revaluation reserve. Ahold will no longer revalue its
properties and has reversed the only revaluation it recorded in 1988 for an amount at that time of EUR 44. As preferred
under Dutch GAAP, Ahold has adjusted its Dutch GAAP comparative financial position and results for the effect of this
change for fiscal 2001 and 2000. As a result of this change, Ahold's shareholders' equity as of December 29, 2002
decreased by EUR 17. The effect of this change on fiscal 2001 and 2000 is presented in Note 3.
Goodwill and intangible assets
On November 8, 2000, The Netherlands Council for Annual Reporting ("CAR") issued RJ 500 "Mergers and Acquisitions"
("RJ 500") with an effective date of January 1, 2001, whereby early adoption is permitted. Among other things, RJ 500
no longer permits charging goodwill balances directly to shareholders' equity; instead only capitalization of goodwill and
amortization over its estimated useful life is allowed. Effective fiscal 2000, the Company changed its acquisition
accounting for all business combinations consummated after December 1, 2000 in partial response to the new guidance
of RJ 500 and in line with international developments and with proposed Dutch law. Beginning December 1, 2000,
goodwill is capitalized and amortized over the period the Company is expected to benefit from the goodwill, not exceeding
20 years. The impact of this change in accounting for goodwill resulted in a decrease of the Company's fiscal 2000 net
income of EUR 5 and an increase in the Company's shareholders' equity of EUR 2,613 as of December 30, 2000. In
accordance with RJ 500, effective January 1, 2001, the Company is also required to capitalize brand names acquired as
part of a business combination. Such brand names and other intangible assets are amortized over the period the Company
is expected to benefit from these intangible assets, not exceeding 20 years.
Restructuring provisions
Upon adoption of RJ 500 as of January 1, 2001, the Company began accounting for its restructuring provisions as part
of business combinations in accordance with stricter criteria prescribed by RJ 500 and revised RJ 252 "Provisions"
("RJ 252"). These criteria include the existence of a detailed formal plan identifying at least (i) the business or part of a
business concerned; (ii) the principal locations affected; (iii) the location, function and approximate number of employees
who will be compensated for terminating their services; (iv) the expenditures that will be undertaken; and (v) the timing
of when the plan will be implemented. Further, the Company must raise valid expectations with those affected that it will
carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. In
order to enhance internal consistency, Ahold changed its accounting for business combinations related to restructuring
provisions for fiscal 2002. First, for business combinations in fiscal 2000 that were made after December 1, 2000 (the
date after which Ahold began capitalization of goodwill as described above under "Goodwill"), restructuring provisions are
only recognized upon acquisition if they meet all the criteria in RJ 500/RJ 252. Therefore, Ahold has adjusted its financial
position and results for fiscal 2001 and 2000 accordingly to account for such restructuring provisions under RJ 500/RJ
252. Second, for business combinations before December 1, 2000 for which a restructuring reserve was still accrued as of
January 1, 2001, Ahold has adjusted these reserves in order to meet the more strict requirements of revised RJ 252,
effective January 1, 2001. The effect of this change on fiscal 2001 is presented in Note 3.
Events after the balance sheet date
In 2002, the CAR amended Guideline 160 "Events after the balance sheet date" ("RJ 160"). RJ 160 prohibits the
presentation of dividend payments declared after the balance sheet date as a liability. Dividends declared after the balance
sheet date are required to be either recognized as a separate component of shareholders' equity or disclosed in the notes
to the financial statements. However, if a company's articles of association require the distribution of preferred dividends
and the results for the year are sufficient for doing so, the amount payable to holders of preference shares must be
recorded as a liability. RJ 160 is effective for fiscal years beginning on or after January 1, 2003 with early adoption
encouraged. The Company adopted RJ 160 in fiscal 2002, which did not have a material impact on these consolidated
financial statements.
The accompanying consolidated financial statements include the assets, liabilities and results of operations of all
subsidiaries which Ahold, either directly or indirectly controls. Intercompany balances and transactions have been eliminated
in the consolidation. A minority interest is recorded in the balance sheet and the statements of operations for the minority
shareholders' share in the net assets and the income or loss of subsidiaries, respectively. Ahold would not recognize the
minority shareholders' share in the loss to the extent this would result in recording a minority interest receivable balance,
unless the minority shareholder has an obligation to fund the shareholders' deficits of the subsidiary. For fiscal 2002, 2001
and 2000, the minority interest in the net assets and income of subsidiaries mainly relates to the minority shareholders'
interest in Schuitema N.V. ("Schuitema"), in which Ahold has a 73.2% interest and Peapod, the U.S. on-line grocer, in
which Ahold had a 51% interest from June 2000 until August 2001 and has a 100% interest after that date.
