Note 16
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units ("CGUs") that are
expected to benefit from that business combination. The carrying amounts of goodwill allocated to CGUs within Ahold's
business segments are as follows:
January 1, 1 January 2,
2006 1 2005
Business segment
CGU
Stop Shop/Giant-Landover Arena
Peapod
22 19
Giant-Carlisle/Tops Arena
Giant-Carlisle
14 12
Tops
- 13
Albert Heijn Arena
Albert Heijn
33 22
Etos
32
Central Europe Arena
Czech Republic
20 -
Schuitema
Schuitema
3 4
Total retail
95 72
Foodservice
U.S. Foodservice
U.S. Foodservice
- 1,889
Broadline
2,086 -
Multi-Unit
82 -
Total Foodservice
2,168 1,889
1 Ahold Group
2,263 1,961
Following the announcement on November 29, 2005 that U.S. Foodservice will be reorganized into two customer-focused
operating companies, Ahold allocated the goodwill that was assigned to the U.S. Foodservice CGU to these two operating
companies (Broadline and Multi-Unit) based on their relative fair value. Goodwill has been tested for impairment at the level
of these two CGUs as of January 1, 2006.
In addition to goodwill recognized upon acquisitions at U.S. Foodservice, brand names have been recognized upon acquisitions
with a carrying amount of EUR 14 and EUR 12 as of January 1, 2006 and January 2, 2005, respectively. Brand names are not
amortized as they have an indefinite useful life (see Note 17).
CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently if there are indications that
a particular CGU might be impaired. The recoverable amount of each CGU is determined based on value-in-use or fair value
less costs to sell calculations. Value-in-use calculations use cash flow projections covering a maximum period of ten years that
are based on three-year financial budgets approved by Company management. Cash flows beyond this period are extrapolated
using estimated growth rates that do not exceed the long-term average growth rate for the retail trade or foodservice business
in which the CGU operates and are consistent with forecasts included in industry reports. The rates used to discount the
projected cash flows reflect specific risks relating to relevant CGUs and are 7.2% for foodservice operations in the U.S., 7.6%
for retail operations in the U.S., 5.8% for the Netherlands and 7.1% for the Czech Republic.
Impairment losses of EUR 19 recognized in 2005 were related to the Giant-Carlisle/Tops Arena (EUR 14) and impairments of
goodwill allocated to individual stores in the Albert Heijn Arena (EUR 2) and Schuitema (EUR 3). The impairment loss of
EUR 14 recognized in the Giant-Carlisle/Tops Arena related to the CGU Tops. This impairment loss was recognized due to a
weaker economic environment and strong competition primarily in the northeast Ohio and eastern New York regions. As a result
of performing the goodwill impairment test, the Company (i) assessed whether additional impairment losses on property, plant
and equipment were required and (ii) reassessed the depreciation policies of its property, plant and equipment in this CGU.
The Company determined that no additional impairment losses on property, plant and equipment were required and that the
useful lives of property, plant and equipment will not be affected.
Goodwill classified as held for sale or sold in 2004 in the Other retail segment related primarily to the divestment of the
operations in Spain (EUR 317).
AHOLD ANNUAL REPORT 2005 135
