Foreign currency translation
Use of estimates
When Ahold acquired the interest in Schuitema, Ahold agreed that Schuitema could maintain the structure regime (rules
applicable to large companies in the Netherlands) which provides Ahold with indirect control over Schuitema. Under the
structure regime, direct control rests with Schuitema's supervisory board through its rights to appoint Schuitema's
management, adopt the annual accounts and approve significant operating decisions. During the periods presented,
Ahold had the right to appoint two members and nominate a neutral person to serve as the chairman of the five member
supervisory board. In accordance with Schuitema's shareholder agreement, Ahold has the right to terminate or mitigate the
structure regime after having had intensive consultations with Schuitema's supervisory board and its management team and
taking into account the perception of independence of Schuitema in the market. Effective March 31, 2003, a new
shareholders' agreement between Ahold and Schuitema has come into effect, enhancing the influence of Schuitema's
supervisory board in the decision to terminate (or mitigate) the structure regime. (This development must be weighed against
legal and corporate governance initiatives enhancing shareholder rights). If the structure regime were to be abandoned (or
mitigated), Ahold would exercise direct control over Schuitema as its majority shareholder. Based on these rights Ahold has
had effective control over Schuitema and, accordingly, Schuitema has been consolidated for all periods presented.
Subsidiaries, joint ventures and equity investees record transactions in their functional currency, which is the principal
currency of the economic environment in which they operate. Transactions in currencies other than the functional currency
of the subsidiary, joint venture and equity investee are recorded at the rates of exchange prevailing at the date of the
transaction in the accompanying statements of operations. Monetary assets and liabilities in currencies other than the
functional currency are translated at the rates of exchange prevailing at the balance sheet date and gains and losses are
reported in the statements of operations. Exchange gains or losses from 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 were:
1 Euro x US dollar 2001 2000
Balance sheet:
Year-end rate 1.0438 0.8836 0.9424
Statements of operations:
1st quarter 0.8780 0.9171 0.9790
2nd quarter 0.9399 0.8648 0.9313
3rd quarter 0.9833 0.9014 0.8941
4th quarter 1.0016 0.8936 0.8696
1 US dollar x Euro 2001 2000
Balance sheet:
Year-end rate 0.9580 1.1317 1.0611
Statements of operations:
1st quarter 1.1389 1.0904 1.0215
2nd quarter 1.0640 1.1563 1.0738
3rd quarter 1.0170 1.1094 1.1184
4th quarter 0.9984 1.1191 1.1500
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
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