(4) Impairment of other long-lived assets
Under Dutch GAAP, long-lived assets are subject to periodic impairment tests when circumstances indicate that an
impairment may exist. In determining whether impairments exist, the Company groups its assets at the lowest level
of identifiable cash flows. If the carrying amount of an asset (or asset group) exceeds its fair value, which is generally
measured based on discounted cash flows, an impairment loss is recognized in an amount equal to the difference.
Under US GAAP, long-lived assets are subject to periodic impairment tests when circumstances indicate that an
impairment may exist. In determining whether impairments exist, the carrying value of the asset is compared to the
undiscounted cash flows associated with the asset. The Company groups its assets at the lowest level of identifiable cash
flows only. Only if an asset's (or asset group's) carrying amount exceeds the sum of the undiscounted cash flows that are
expected to be generated from the use and eventual disposition of the asset, an impairment loss is recognized in an
amount equal to the amount by which the asset's carrying amount exceeds its fair value, which is generally measured
based on discounted cash flows. Long-lived assets and certain identifiable other intangible assets to be disposed of are
reported at the lower of carrying amount or fair value.
As a result of the difference described above a EUR 9 adjustment was included in the reconciliation of consolidated net
income (loss) relating principally to lower impairments recorded under US GAAP in Tops Markets of EUR 8.
(5) USF purchase accounting adjustments
As described in Note 3, the Company identified certain accounting errors relating to pre-acquisition transactions at USF,
which was found to have inappropriately recorded EUR 117 of vendor allowances in excess of those earned at its
acquisition date in April 2000. Under Dutch GAAP, the adjustments necessary to correct these vendor allowances were
recognized as an adjustment to the original purchase price allocation, resulting in an increase in goodwill which was
charged directly to equity at the time. Under US GAAP, the adjustments necessary to correct these vendor allowances were
recognized immediately as a loss in income in fiscal 2000.
(6) Restructuring provisions
Under Dutch GAAP, through December 31, 2000, the Company recorded provisions for closed and divested facilities ("exit
costs") and severance and other personnel costs (all costs collectively, "Restructuring Costs") when it entered into plans
for store and distribution center closures or sales, as described in Note 2. Effective January 1, 2001, restructuring
provisions are recorded for expected costs of planned reorganizations only if certain specified criteria are met.
Under US GAAP, the criteria that must be met in order to record a restructuring provision, including a requirement to
communicate terms of a restructuring plan to employees prior to recognition of the related provision, are defined in EITF
Issue No. 94-3 "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)" ("EITF 94-3") and EITF Issue No. 95-3 "Recognition of Liabilities
in Connection with a Purchase Business Combination" ("EITF 95-3") and further discussed in SEC Staff Accounting
Bulletin No. 100 "Restructuring and Impairment Charges" ("SAB 100"). Application of these provisions can result in a
difference relating to the timing and amount of restructuring charges recognized between US GAAP and Dutch GAAP.
The Company has, under Dutch GAAP, incurred restructuring provisions as a result of both restructuring of operations and
also as a direct result of certain acquisitions.
In fiscal 2001, the Company incurred provisions for the acquisition of Alliant in November 2001. The main feature of the
restructuring plan for this acquisition related to the integration of USF's operations and those of Alliant, and caused the
Company to recognize a provision for restructuring of its USF operations. The expected total provisions under Dutch GAAP
of EUR 141 included EUR 111 costs provided in December 2001 for the integration of USF and Alliant post-acquisition.
Under US GAAP, at December 30, 2001, the Company did not meet the notification criteria for recognizing certain
restructuring costs including EUR 31 for the acquisition and integration of Alliant. In addition, provisions of EUR 2 for
other entities were not recognized in fiscal 2001 under US GAAP.
In fiscal 2002, under Dutch GAAP, the Company incurred provisions for restructuring plans of EUR 42, mainly relating to
USF and Albert Heijn. Under US GAAP additional restructuring charges were recognized in income amounting to EUR 26,
relating to timing differences for the recognition of restructuring costs of which EUR 19 related to USF and EUR 7 to
various other entities.
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