Financial statements - Notes to the consolidated financial statements
Note 36
8 Convertible bond
IFRS requires separate recognition of the liability and equity components for compound financial instruments, such as
convertible bonds. Under Dutch GAAP, convertible bonds were recognized as liabilities at face value. The equity component
of EUR 28 in Ahold's convertible bonds outstanding per December 29, 2003 was recognized as a part of group equity on that
date under IFRS, instead of current liabilities, as reported under Dutch GAAP. Since these bonds were all redeemed in June
2004 at par value, the Company incurred an additional expense in 2004 of EUR 28 under IFRS compared to Dutch GAAP.
This expense is not tax deductible.
9 Recognition of expenses regarding share-based payments
Under IFRS 2, as opposed to Dutch GAAP, the recognition of expenses related to share-based payments is required. Expenses
related to these plans, based on fair value calculations and taking into account the transition rules of IFRS 2, amounted to
EUR 18 and have been recognized in 2004 under IFRS. Recognition of expenses related to equity-settled share-based
payments lead to an increase of group equity of the same amount. Group equity under IFRS consequently did not change
compared to Dutch GAAP as a result of share-based payments.
10 Accounting for pensions and other post-employment and long-term employee benefits
Ahold applied the guidance of SFAS no. 87 and SFAS no. 106 under Dutch GAAP when accounting for pensions and other
post-employment benefits. Similar to Dutch GAAP, actuarial gains and losses will be recognized under IFRS on the basis of
the corridor approach, as a result of which only those actuarial gains and losses that exceed certain thresholds are included
in the periodic expenses. As a one-time exemption all actuarial gains/(losses) as of December 29, 2003 have been added to
(deducted from) group equity as of that date. The adoption of IFRS has not resulted in any material adjustments of the defined
benefit obligations or the plan assets. Due to the adoption of IFRS the measurement date for the U.S. plan valuations was
adjusted from September 30 to December 31 as of 2005, since IAS 19 "Employee Benefits" does not allow the measurement
date to significantly differ from the balance sheet date.
Other differences between IAS 19 and SFAS no. 87 and SFAS no. 106 relevant to Ahold are:
Amortization of past (prior) service cost
IFRS requires the immediate recognition in the consolidated statement of operations of vested benefits related to
plan amendments and a deferred recognition over the vesting period of unvested benefits related to plan amendments.
SFAS no. 87 and SFAS no. 106 allow for a deferred recognition over the expected remaining service period of both the vested
and the unvested benefits related to plan amendments. As a consequence, the balances of deferred past service cost and the
amortization of past service cost through net periodic expense differ under IAS 19, as compared to SFAS no. 87 and
SFAS no. 106.
(De)recognition of additional minimum liabilities
Under SFAS no. 87, an additional pension liability must be recognized if the actuarially measured vested pension rights at
balance sheet date are partly or in whole unfunded and the recognized accrued liability is less than the deficit, or if a prepaid
cost rather than an accrued liability is recognized. This is generally referred to as the "additional minimum liability" provision
under SFAS no. 87. IAS 19 does not contain an "additional minimum liability" provision, but contains restrictions for the
recognition of net assets, which are not included in SFAS no. 87. Ahold recognized additional pension liabilities for a number
of plans in 2004 under SFAS no. 87, which have been eliminated under IAS 19. The restrictions for the recognition of net
assets of defined benefit plans under IAS 19, the so-called "asset ceiling provisions" have not impacted Ahold's reporting
under IFRS in 2004.
Recognition of liabilities for long-term service awards
Under IFRS the Company recognized liabilities related to "other long-term employee benefits," which are not within the scope
of SFAS no. 87 or SFAS no. 106.
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