00 Ahold ANNUAL REPORT 2002 189
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
Occurring Events and Transactions", which defines transactions that are part of recurring operations as separate from those
that are unusual or infrequent, or that meet the criteria for classification as an extraordinary item. SFAS No. 145 amends
SFAS No. 13, "Accounting for Leases", to require that lease modifications that have economic effects similar to sale and
leaseback transactions be accounted for in the same manner as sale and leaseback transactions. In addition, SFAS No.
145 rescinds SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers", and SFAS No. 64, "Extinguishments of
Debt Made to Satisfy Sinking - Fund Requirements", which are not currently applicable to the Company. The provisions of
SFAS No. 145 as they relate to the rescission of SFAS No. 4 are required to be applied beginning January 1, 2003.
Certain provisions related to SFAS No. 13 are effective for transactions occurring after May 15, 2002. Management does
not expect the adoption of SFAS No. 145 to have a material impact on the Company's consolidated results of operations,
financial condition or liquidity.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated With Exit or Disposal Activities". SFAS
No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies
EITF 94-3. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and
measured initially at fair value only when the liability is incurred. The provisions of SFAS No. 146 are effective for exit
or disposal activities that are initiated by the Company on January 1, 2003 and thereafter. The Company has not yet
determined what the effect of adopting SFAS No. 146 will be on the consolidated results of operations, financial position
or cash flows.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure". SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation", to provide alternative
methods of transition to the fair value method of accounting for stock-based employee compensation. In addition, SFAS
No. 148 amends the disclosure provisions of SFAS No. 123 to require disclosure of the effects of an entity's accounting
policy with respect to stock-based employee compensation on reported net income and income per share in annual and
interim financial statements in the summary of significant accounting policies. SFAS No. 148 does not amend SFAS 123
to require companies to account for their employee stock-based awards using the fair value method. However, the
Company was required to adopt the disclosure provisions in fiscal 2002 even though Ahold continues to apply the intrinsic
value method described in APB No. 25. The transition provisions of SFAS No. 148 are effective for fiscal years ending
after December 15, 2002 and early application is permitted. The Company adopted the disclosure provisions of this
standard in fiscal 2002 and does not expect this Statement to have a material effect on its financial position, results of
operations, or its cash flows.
In April 2003 the FASB issued SFAS No. 149, "Amendment of SFAS No. 133 on Derivative Instruments and Hedging
Activities". The Statement amends and clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, it (1) clarifies
under what circumstances a contract with an initial net investment meets the characteristics of a derivative as discussed
in SFAS No. 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an
underlying to conform it to the language used in FASB Interpretation ("FIN") No. 45, "Guarantor Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" and (4) amends certain
other existing pronouncements. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003,
except as stated below and for hedging relationships designated after June 30, 2003. The provisions of SFAS No. 149
that relate to SFAS No. 133's Implementation Issues ("Implementation Issues") that have been effective for fiscal quarters
that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In
addition, certain provisions relating to forward purchases or sales of when-issued securities or other securities that do not
yet exist, should be applied to existing contracts as well as new contracts entered into after June 30, 2003. SFAS No. 149
is applied prospectively. The Company is currently evaluating the impact of SFAS 149 on its consolidated results of
operations, financial position and cash flows.
In May 2003 the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity". SFAS No. 150 modifies the accounting for certain financial instruments that, under previous
guidance, issuers could account for as equity. The Statement requires that those instruments be classified as liabilities in
statements of financial position. SFAS No. 150 affects an issuer's accounting for three types of freestanding financial
instruments, namely:
- Mandatorily redeemable shares, which the issuing company is obligated to buy back in exchange for cash or other assets.
- Instruments, other than outstanding shares, that do or may require the issuer to buy back some of its shares in exchange
for cash or other assets. These instruments include put options and forward purchase contracts.
