Note 37
The following is a description of the adjustments that only had an impact on net income and shareholders' equity or
adjustments in the classification of amounts in the balance sheet or statement of operations that did not have an impact
on net income or shareholders' equity.
(1) Multi-employer plan
Under US GAAP, the Company accounted for the participation in multi-employer benefit plans as a defined contribution plan
in accordance with SFAS No. 87 and 106. Upon conversion to IFRS, the Company reviewed all of its multi-employer plans to
determine the appropriate accounting under IFRS. The Company discovered that one of its multi-employer plans, which has
always had the status of a multi-employer plan, was effectively a single-employer plan, since one of the Company's subsidiaries
was the only significant participant in the plan. It was therefore determined that it was appropriate to account for this plan as a
single-employer plan by applying defined benefit plan accounting. The 2004 financial statements have been restated to reflect
the effect of accounting for this plan as a defined benefit plan under US GAAP. The impact of this adjustment on opening
equity for 2004, excluding tax effects, was EUR 16. The restatement had a negligible impact on net income for 2004.
(2) Long and medium term service awards
At certain subsidiaries the Company rewards employees after 12.5, 25 and 40 years of service. These long-term service awards
are accounted for in accordance with IAS 19. Under IFRS an accrual is required to be recorded for these payments based on
actuarial calculations. Under US GAAP these long-term service awards were expensed as incurred, since it was not deemed
practicable to make a reasonable estimate of the amounts to record for future payments under the plan. Subsequently, the
Company was able to obtain actuarial estimates of the expense under IFRS. The Company concluded that it would have been
appropriate to record an accrual under US GAAP based on the same recognition criteria as IFRS and restated the 2004
financial statement to reflect the effect of this calculation under US GAAP. These expenses are recognized over the expected
service term of employees. For US GAAP an adjustment of the opening equity of EUR 18 was made. The restatement had a
negligible impact on net income for 2004.
(3) Income taxes
In the reconciliation to US GAAP as previously reported, the Company used a tax rate of approximately 40% to calculate the
deferred tax effect of a US GAAP reconciling item related to goodwill for one of its subsidiaries. The Company concluded that
the appropriate tax rate to be used for the calculation of the deferred tax effect of US GAAP reconciling items for this
subsidiary should have been approximately 36% in the 2004 reconciliation, as a result of which the tax impact on net income
was overstated by EUR 21 in 2004. The 2004 financial statements have been restated to correct the effect of the difference in
the tax rate under US GAAP. This adjustment did not have an effect on opening equity for 2004 under US GAAP.
(4) Cumulative preferred financing shares
In February 2004 the Company entered into an agreement with the holders of the cumulative preferred financing shares to
amend the terms of the cumulative preferred financing shares. As part of the amendments, the Company and the preferred
shareholders agreed that, in the event of a change-in-control, the Company will propose to redeem the shares, subject to
acceptance by the preferred shareholders as well as the approval of the common shareholders. The Company initially analyzed
the cumulative preferred financing shares under SFAS No. 150 and concluded that the cumulative preferred financing shares
should not be classified as liabilities and therefore continued to classify these shares as permanent shareholders' equity.
However, EITF D-98 requires securities with redemption features that are not solely within the control of the Company to be
classified outside of permanent equity, irrespective of the probability that an event triggering redemption will occur. Because
the Company is required to propose redemption of the cumulative preferred financing shares in the event of a change-in-control
situation and such proposal is only subject to acceptance by the preferred shareholders and approval by the common
shareholders, the redemption is not considered solely within the control of the Company. Consequently, under EITF D-98,
the cumulative preferred financing shares can as of February 2004 no longer be considered permanent shareholders' equity
of the Company and must be classified as a separate class of equity. This reclassification is included in the restated balance
sheet as of January 2, 2005.
AHOLD ANNUAL REPORT 2005 201
