00 Ahold ANNUAL REPORT 2002 173
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
The following table summarizes what Ahold's reported US GAAP net income (loss) and per share amounts would have been
for all periods presented excluding the amortization expense recognized in those periods related to goodwill and brand
names that are no longer amortized, after the adoption of SFAS No. 142:
Fiscal 2002 Fiscal 2001 Fiscal 2000
Net income (loss)
(4,328)
(254)
442
Add back: goodwill amortization
307
245
Add back: brand names amortization
20
18
Adjusted net income (loss)
(4,328)
73
705
Net income (loss) per share - basic:
Reported net income (loss)
(4.67)
(0.30)
0.60
Goodwill amortization
0.36
0.33
Brand names amortization
0.02
0.02
Adjusted net income (loss)
(4.67)
0.08
0.95
Net income (loss) per share - diluted:
Reported net income (loss)
(4.67)
(0.30)
0.55
Goodwill amortization
0.35
0.31
Brand names amortization
0.02
0.02
Adjusted net income (loss)
(4.67)
0.07
0.88
(3) Impairment of goodwill and other intangible assets
Under Dutch GAAP, goodwill and other intangible assets are evaluated for impairment if there are changes in circumstances
that indicate that the carrying amount of the assets may not be recoverable. The recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset to its recoverable amount, calculated as the higher
of the net selling price or the discounted future net cash flows expected to result from the use of the asset and its
eventual disposition.
Under US GAAP, the Company adopted SFAS No. 142 on December 31, 2001 and, at that time, ceased amortizing
goodwill and brand names that resulted from business combinations completed prior to June 30, 2001. SFAS No. 142
requires an evaluation of goodwill for impairment at a reporting unit level upon adoption, annually thereafter, and more
frequently if circumstances indicate a possible impairment. This impairment test is comprised of two steps. The initial
step is designed to identify potential goodwill impairment by comparing an estimate of the fair value of a reporting unit to
its carrying value, including goodwill. If the carrying value exceeds the fair value of the reporting unit, a second step is
performed, which compares the implied fair value of the applicable reporting unit's goodwill with the carrying amount of
that goodwill, to measure the amount of goodwill impairment, if any. As required, the Company performed a transitional
impairment test on each of its reporting units upon adoption of SFAS No. 142.
Under US GAAP, the reporting unit measurement of fair value was based on management's best estimates of future
discounted cash flows. Each reporting units' discounted cash flow analysis used a discount rate that corresponds to the
reporting unit's weighted-average cost of capital, which is consistent with that used for investment decisions and takes into
account the specific risks associated with the reporting unit and the general risk of the economic environment in which it
operates. Certain other key assumptions utilized, including changes in customer base, revenue, product cost, operating
expenses and effective tax rates, are based on estimates related to the reporting units' initiatives. Such assumptions are
also consistent with those utilized in the reporting unit's annual planning processes.
The additional impairment losses recognized under US GAAP mainly relate to an impairment of goodwill that had been
capitalized under US GAAP prior to December 1, 2000, when goodwill was charged directly to equity under Dutch GAAP.
Furthermore, reconciling items between Dutch and US GAAP arise from the difference in the manner in which the goodwill
impairment is calculated as described above.
In fiscal 2002, under Dutch GAAP, the Company recognized goodwill impairment losses of EUR 1,281, and impairment
losses on other intangible assets of EUR 6. Under US GAAP, additional goodwill impairment losses were recognized of
EUR 3,228 including a transitional impairment loss of EUR 2,493 net of income tax benefit of EUR 257. Additional
impairment losses of EUR 16 relating to impairment losses on other intangible assets were recognized.
