Notes: 31
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Ahold Annual Report 2003
Financial Statements
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 under US GAAP, after the adoption of SFAS No. 142:
2003
2002
2001
Net income (loss)
(747)
(4,328)
(254)
Add back: goodwill amortization
307
Add back: brand names amortization
20
Adjusted net income (loss)
(747)
(4,328)
73
Net income (loss) per share - basic
Reported net income (loss)
(0.73)
(4.32)
(0.27)
Goodwill amortization
0.33
Brand names amortization
0.02
Adjusted net income (loss) per share - basic
(0.73)
(4.32)
0.08
Net income (loss) per share - diluted
Reported net income (loss)
(0.73)
(4.32)
(0.27)
Goodwill amortization
0.32
Brand names amortization
0.02
Adjusted net income (loss) per share - diluted
(0.73)
(4.32)
0.07
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.
