Notes: 2 98 Ahold Annual Report 2003 Financial Statements remeasuring certain intercompany loans that are determined to be of a long-term investment nature are recorded directly in shareholders' equity. The Company's reporting currency is the Euro. Upon consolidation, the balance sheets of subsidiaries with functional currencies other than the Euro are translated at the rates of exchange prevailing at the end of the year. The statements of operations denominated in currencies other than Euro are translated at an average exchange rate per quarter. The resulting exchange differences are recorded directly in consolidated shareholders' equity and are only included in income upon sale or liquidation of the underlying foreign subsidiary or associated company. The rates of exchange between Euro and US dollar applied in these consolidated financial statements were: 1 Euro x US dollar 2003 2002 2001 Balance sheet Year-end rate 1.2429 1.0438 0.8836 Statements of operations 1st quarter 1.0735 0.8780 0.9171 2nd quarter 1.1510 0.9399 0.8648 3rd quarter 1.1262 0.9833 0.9014 4th quarter 1.1906 1.0016 0.8936 1 US dollar x Euro 2003 2002 2001 Balance sheet Year-end rate 0.80451 0.9580 1.1317 Statements of operations 1st quarter 0.93152 1.1389 1.0904 2nd quarter 0.86876 1.0640 1.1563 3rd quarter 0.88792 1.0170 1.1094 4th quarter 0.83992 0.9984 1.1191 Use of estimates The preparation of Ahold's consolidated financial statements in conformity with Dutch GAAP and US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those required in the accounting for vendor allowances, purchase accounting, the impairment of tangible and intangible assets, pensions and other post-retirement benefits, self-insurance programs and income taxes. Actual results could differ from those estimates. All assumptions, anticipations, expectations and forecasts used as a basis for certain estimates within the consolidated financial statements represent good-faith assessments of the Company's future performance for which it believes there is a reasonable basis and represent the Company's view only as of the dates they are made. It involves known and unknown risks, uncertainties and other factors that could cause the Company's actual future results, performance and achievements to differ materially from those forecasted. Certain risks and concentrations The Company's product revenues are concentrated in the retail and foodservice industry, which is highly competitive and heavily subject to changes in customer behavior. Significant changes in the industry or customer behavior, or the emergence of new competitors in the markets could adversely affect the Company's operating results. Also, a majority of the Company's revenue is derived from sales in the food industry and is highly dependent on vendor allowances. Significant changes in the pricing and purchase terms in this industry could adversely affect operating results. In addition, a significant portion of the Company's operating income is derived from international activities. Fluctuations of the Euro against foreign currencies, such as the U.S. Dollar, changes in local regulatory or economic conditions or significant dislocations in local distribution channels could adversely affect the Company's operating results. The Company maintains the majority of its cash balances and all of its short-term investments with no more than ten financial institutions. The Company invests with high credit quality financial institutions and, by policy, limits the amount of credit exposure to any one financial institution. The Company's wholly-owned foodservice subsidiary in the U.S., U.S. Foodservice ("USF") and its subsidiaries have accounts receivable from several customers in the foodservice industry and from time to time sells certain receivables by way of securitizations and retains a participating interest. Management of the Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts.

Jaarverslag Ahold | 2003 | | pagina 1