00 Ahold ANNUAL REPORT 2002 31
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
record such assets at their fair values at the acquisition date and the subsequent depreciation thereof. In certain
instances, such adjustments to the fair values of these acquired assets affected the amounts of gains that we recognized
on subsequent sales of these acquired assets and real estate properties, which have been adjusted accordingly.
We have recorded adjustments related to a decrease in the fair value of acquired real estate property at Superdiplo and an
increase in the fair value of acquired real estate property at ICA. Since certain of these properties were subsequently sold,
the gains recognized on the sale of these properties were decreased accordingly in fiscal 2001 and fiscal 2000,
respectively.
During fiscal 2001, we partially applied the guidance set forth by The Netherlands Council for Annual Reporting in
RJ 252 "Provisions" by applying it only prospectively for acquisitions after January 1, 2001. For more information, please
see Note 2 to our financial statements. Furthermore, various errors were made in the calculations of the restructuring
reserves, which have been adjusted.
In connection with several of our acquisitions in fiscal 2001, we did not allocate purchase consideration to certain
identifiable intangible assets upon acquisition. Our restated consolidated financial position and results for fiscal 2001
reflect adjustments to record these acquired intangible assets at their fair values at the respective dates of their
acquisition and a corresponding reduction of goodwill.
In connection with our acquisition of Stop Shop, we recognized certain pre-acquisition income tax contingency reserves
and valuation allowances against deferred tax assets in the acquisition balance sheet. As a result of the completion of an
Internal Revenue Service review (US tax authorities) in fiscal 2001, reserves and allowances should have been reversed
with a corresponding decrease in goodwill. In our restated consolidated financial position for fiscal year-end 2001, we
have increased shareholders' equity to reflect this adjustment.
As a result of these adjustments, shareholders' equity as of fiscal year-end 2001 increased by EUR 71 million and net
income decreased by EUR 36 million for fiscal 2001 and EUR 8 million for fiscal 2000.
Reserves, allowances and provisions
Prior to fiscal 2002, we recorded certain reserves, allowances and provisions related to income taxes, pensions and
restructuring expenses. We subsequently determined that these reserves, allowances and provisions, and releases thereof,
should not have been recorded under Dutch GAAP or US GAAP, since the documentation available was not adequate to
support the amounts recorded, or the reserves, allowances and provisions were of a non-specific nature. In addition,
certain pension and early retirement plans had not been accounted for as defined benefit plans and the charges and
accruals related to certain health and welfare plans were not calculated appropriately prior to fiscal 2002.
As a result of these adjustments, shareholders' equity as of fiscal year-end 2001 decreased by EUR 105 million and net
income decreased by EUR 33 million for fiscal 2001 and EUR 38 million for fiscal 2000.
Real Estate Transactions
In fiscal 2001, we entered into a USD 638 million leveraged lease transaction involving the sale of our interests in 46
separate properties in the United States for a total sales price of EUR 722 million, which generated a net gain of EUR 81
million, comprising EUR 107 million of gains on certain properties and EUR 26 million of losses on others. The properties
were sold to special purpose entities established by unaffiliated third parties, and in conjunction with the sale were leased
back by us. Under Dutch GAAP and US GAAP, we accounted for the lease arrangements as operating leases. We also
deferred the EUR 81 million net gain related to the sale of these properties and amortized this net gain over the respective
lease term of 20 to 25 years.
We have chosen to apply for Dutch GAAP the same detailed criteria for testing if a lease should be treated as an operating
lease or as a capitalized lease under US GAAP. Therefore, the restated financial position and results for fiscal 2001 have
been adjusted to reflect that the leases of seven properties that had been considered operating leases are now considered
capitalized leases under Dutch GAAP. As a result, these seven properties remain on the balance sheet and the related
lease obligation is recorded as a financing. The EUR 19 million net gain on these properties has been appropriately
deferred over the respective lease terms of 20 to 25 years. Additionally, adjustments were made to reflect that a net gain
of EUR 62 million, on the sale of the remaining 39 properties, which qualified as operating leases, should have been
immediately recognized in income under Dutch GAAP and not deferred over the remaining lease term, since the sale
transactions were made at fair value.
