Operating and Financial Review and Prospects
54
Ahold Annual Report 2003
Operating and Financial Review and Prospects
2002
Our loss from unconsolidated joint ventures and equity
investees was EUR 38 million in 2002 compared to EUR
192 million in 2001. These losses were primarily caused
by losses at DAIH in 2002 and 2001 reflecting the
losses incurred at Disco and Santa Isabel and, to a
lesser extent, losses at Luis Paez S.A. ("Luis Paez")
included under "Others" in the table above. These
losses were partly offset by income from ICA, JMR and
Paiz Ahold in such years. The negative impact of DAIH
in 2002 was less than in 2001 because DAIH was
consolidated beginning in the third quarter of 2002. In
addition, Disco's loss in 2002 was offset in part by a
change in Argentine law that redenominated certain
debts of Argentine companies from US dollar-
denominated debt to Argentine peso-denominated debt.
For additional information, please see
"Share in Income (Loss) of Joint Ventures and
Equity Investees" below.
Net income (loss)
2003
Net loss in 2003 was EUR 1 million, compared to EUR
1.2 billion in 2002. The significant decrease in net loss
was primarily caused by lower operating expenses in
2003 as a result of the lower level of goodwill
impairment charges in 2003 compared to 2002. Net
loss in 2002 was primarily caused by the EUR 1.4
billion asset impairment charges discussed above and
the EUR 372 million loss on related party default
guarantee relating to the default by VRH on debt that we
had guaranteed. Higher net financial expenses and the
weakening of the US dollar to the Euro also contributed
to the 2002 net loss.
2002
Our net loss in 2002 was EUR 1.2 billion, compared
to net income of EUR 750 million in 2001. The net loss
in 2002 was primarily due to impairment charges of
EUR 1.4 billion relating to asset impairments discussed
above, compared to 2001 when we only recorded
impairment charges of EUR 18 million.
Net income (loss) after preferred dividends per common
share - basic
2003
Net income (loss) after preferred dividends per common
share - basic is calculated as net income (loss) after
preferred dividends, divided by the weighted average
number of our common shares outstanding during the
applicable period. Net loss after preferred dividends per
common share - basic amounted to EUR 0.04 per
common share in 2003 compared to a net loss of EUR
1.24 per common share in 2002.
The weighted average number of common shares
outstanding used for these calculations was 2.3% higher
in 2003 than in 2002 primarily as a result of the impact
of the issuance of common shares and ADSs in
connection with the rights offering in December 2003.
2002
Net income (loss) after preferred dividends per common
share - basic amounted to a net loss of EUR 1.24 per
common share in 2002 compared to net income of EUR
0.77 per common share in 2001.
The weighted average number of common shares
outstanding used for these calculations was higher in 2002
than in 2001 primarily as a result of the impact of the
offering of common shares and ADSs in September 2001.
Adjustments to conform to US GAAP
For 2003, our net loss under US GAAP was EUR 747
million compared to a net loss under Dutch GAAP of
EUR 1 million. Net loss per common share - basic as
determined in accordance with US GAAP was EUR 0.73
per share in 2003 compared to net loss per common
share - basic of EUR 4.32 in 2002. The most significant
reconciling items in 2003 related to the different treatment
under US GAAP of assets held for sale (EUR 506 million)
and the cumulative effect of the change in accounting
principle for consideration received from vendors (EUR
100 million).
Under US GAAP if the expectation is that it is more
likely than not that an asset will be sold before the end
of its estimated useful life, an impairment analysis
should be performed. Under US GAAP, we recorded an
additional impairment of EUR 506 million due to a
higher carrying value of the assets held for sale. This
carrying value under US GAAP included the unrealized
cumulative translation adjustment of EUR 582 million,
that was previously accounted for in shareholders'
equity. Under Dutch GAAP the cumulative translation
adjustment is recognized in the statements of operations
at the moment the divestment is completed.
We adopted EITF 02-16 under both Dutch and US
GAAP during the fourth quarter of 2003, effective for all
of 2003. During 2003, under Dutch GAAP, we recorded
a cumulative effect adjustment of EUR 100 million in
opening equity for 2003, but under US GAAP, in
accordance with APB Opinion 20, we included the
amount of the cumulative effect adjustment in the
statement of operations. For a more detailed discussion
of the impact of EITF 02-16, please see "Critical
Accounting Policies" and Note 2 to our consolidated
financial statements included in this annual report.
In 2002, the net loss under US GAAP was EUR
4.3 billion compared to net loss of EUR 1.2 billion under
Dutch GAAP. Net loss per common share - basic as
determined in accordance with US GAAP increased to
EUR 4.32 per share in 2002 from EUR 0.27 per share
in 2001. The most significant reconciling item in 2002
related to the impairment of goodwill. Upon the adoption
of SFAS No. 142 under US GAAP on December 31,
2001, we recorded under US GAAP a transitional
impairment loss of EUR 2.8 billion in 2002, which was
recorded as a cumulative effect of a change in
accounting principle for goodwill, and an additional
aggregate impairment loss for goodwill and other
intangible assets of EUR 751 million under US GAAP,
which is recorded as a current-year impact of
