Settlement securities class action
TOTAL COMPANY OPERATING INCOME
Impairment goodwill
Our impairment losses relating to goodwill increased by
EUR 19 million in 2005 compared to 2004. In 2005,
we recorded impairment losses of goodwill of EUR 14
million in the Giant-Carlisle/Tops Arena, EUR 3 million at
Schuitema and EUR 2 million in the Albert Heijn Arena.
Impairment and amortization charges of non-current
assets
Our impairments of non-current assets were EUR 87 million
lower in 2005 compared to 2004. In 2005, we recorded the
following material impairments of non-current assets:
EUR 70 million in the Giant-Carlisle/Tops Arena due to
impairments of Tops stores as a result of store closures,
especially in the northeast Ohio region;
EUR 17 million at U.S. Foodservice due to impairments
of office locations and warehouses, included in the
restructuring costs discussed above; and
EUR 8 million in the Stop Shop/Giant-Landover Arena
due to impairments of property, plant and equipment.
Our operating expenses and operating expenses as a
percentage of net sales increased in 2005 compared to
2004, primarily because of the charge of EUR 803 million
in operating income, which includes insurance proceeds, for
the agreement to settle the Securities Class Action. Under
the terms of the settlement agreement in the Securities
Class Action, the lead plaintiffs agree to settle all claims in
the Securities Class Action against Ahold, its subsidiaries,
the individual defendants and the underwriters for the sum
of USD 1.1 billion (EUR 937 million). This amount includes
USD 9 million (EUR 8 million) as compensation to the VEB
for facilitating the global settlement. The settlement is
subject to final court approval. Excluding the impact of the
settlement, net of the insurance proceeds, our operating
expenses and operating expenses as a percentage of net
sales decreased in 2005 compared to 2004. For more
information on the settlement of the Securities Class Action,
see Note 35 to our consolidated financial statements
included in this annual report.
In 2004, we recorded the following material impairments of
non-current assets:
EUR 74 million at Schuitema due to impairment of
stores, capitalized commercial expenses and loan
receivables;
EUR 30 million in the Central Europe Arena due to
impairments of the divested hypermarkets in Poland;
EUR 29 million in the Stop Shop/Giant-Landover Arena
due to impairments of stores as a result of increased
competitive pressure;
EUR 26 million in the Giant-Carlisle/Tops Arena due to
impairments of stores as a result of increased competitive
pressure; and
EUR 13 million in the Albert Heijn Arena due to
impairments of stores as a result of increased competitive
pressure.
Gain on disposal of non-current assets
We recorded a gain on the disposal of non-current assets of
EUR 52 million in 2005, compared to a gain of EUR 15
million in 2004. In 2005, our gain on the disposal of
non-current assets included a EUR 19 million gain on the
disposal of the hypermarkets in Poland and a shopping
center in the Central Europe Arena, a EUR 19 million gain
on the disposal of stores in the Giant-Carlisle/Tops Arena
and EUR 7 million in the Stop Shop/Giant-Landover
Arena. Our gain on the disposal of non-current assets in
2004 included a EUR 9 million gain on the sale of a
shopping center in the Central Europe Arena.
2005
2004
Euros in millions,
except percentages
(52 weeks)
Change
(53 weeks)
Retail
Stop Shop/Giant-
Landover Arena
708
2.5
691
Giant-Carlisle/Tops
Arena
72
(36.8)
114
Albert Heijn Arena
288
(9.1)
317
Central Europe
Arena 1
(44)
(18.5)
(54)
Schuitema
95
41.8
67
Total retail
1,119
(1.4)
1,135
Foodservice
U.S. Foodservice
86
59.3
54
Group Support Office
(957)
259.8
(266)
Ahold Group
248
(73.1)
923
1 The financial year for the Central Europe Arena corresponds to the calendar year.
Consequently, financial year 2004 did not contain an additional week.
Our operating income decreased in 2005 compared to 2004
mainly due to impact of the settlement of the Securities
Class Action of EUR 803 million, which includes insurance
proceeds. Our operating income in 2005 compared to 2004
was also negatively affected by the impact of the
restructuring charges at U.S. Foodservice, which negative
AHOLD ANNUAL REPORT 2005 63
