Management's discussion analysis
NET INCOME ATTRIBUTABLE TO COMMON
SHAREHOLDERS OF AHOLD
ADJUSTMENTS TO CONFORM TO US GAAP
2005 1
BUSINESS SEGMENT RESULTS
2005 1
Net income attributable to common shareholders of Ahold in
2005 was EUR 133 million, a significant decrease
compared to EUR 885 million in 2004. This decrease in
2005 was primarily a result of the impact of the settlement
of the Securities Class Action and the positive impact of
EUR 379 million net gain related to the ICA put option
transaction in 2004. For more information on the settlement
of the Securities Class Action, see "Total Company operating
expenses - Settlement securities class action" above and
Note 35 to our consolidated financial statements included
in this annual report.
Our consolidated financial statements have been prepared
in accordance with IFRS, as adopted by the EU, which
differs in certain significant respects from US GAAP. For
2005 and 2004, our net income under IFRS was EUR 159
million and EUR 898 million, respectively, compared to a
net loss under US GAAP of EUR 9 million in 2005 and a
net income under US GAAP of EUR 89 million in 2004.
Under US GAAP, net loss per common share - basic was
EUR (0.03) in 2005, compared to a net income per
common share - basic of EUR 0.03 in 2004.
The most significant items in reconciling our net income
(loss) under IFRS to net income (loss) under US GAAP in
2005 and 2004 are set forth below:
The most significant items in reconciling our shareholders'
equity under IFRS to shareholders' equity under US GAAP
in 2005 and 2004 are set forth below:
Euros in millions
(Restated)
2004
Items increasing (decreasing)
shareholders' equity in accordance
with IFRS:
Goodwill
3,623
3,214
Investments in joint ventures and
associates, net of tax
1,370
1,529
Other intangible assets, net
of accumulated amortization
503
456
The testing methodology for impairments of goodwill under
IFRS differs in certain aspects from the impairment testing
methodology under US GAAP. With respect to non-current
assets held for sale and discontinued operations, IFRS and
US GAAP have different definitions of a discontinued
operation, as well as differences in the carrying value of
assets held for sale. We record our share of income (loss) of
joint ventures and associates under both IFRS and US GAAP
using the equity method of accounting, but the adjustment
reflects various differences between IFRS and US GAAP. For
more information about the significant items in reconciling
IFRS and US GAAP, as they apply to us, see Note 37 to our
consolidated financial statements included in this annual
report.
During the process of addressing of our material weaknesses,
which no longer exist, we identified certain unintentional
errors that were made in the determination of net income
(loss) and shareholders' equity under US GAAP for 2004.
To correct these errors, we have restated the US GAAP
information in the notes to our consolidated financial
statements with the effect of lowering net income by EUR
21 million. Errors relating to years prior to 2004 amounting
to EUR 21 million have been adjusted as a reduction in
opening equity of financial year 2004. In addition, the
cumulative preferred financing shares, which under US
GAAP are considered equity instruments, have been
reclassified to a separate class of equity, as required by
EITF D-98. For more information about our restatement
under US GAAP, see Note 37d to our consolidated financial
statements included in this annual report.
The following is a discussion of the results of operations,
including net sales and operating income, for our business
segments other than the Group Support Office. Market share
Euros in millions
(Restated)
2004
Items increasing (decreasing) net
income in accordance with IFRS:
Goodwill
17
(158)
Non-current assets held for sale and
discontinued operations
(190)
(491)
Investments in joint ventures and
associates, net of tax
(24)
(261)
Derivative instruments and loans
86
48
Pensions and other post-employment
benefits
(42)
(50)
66
