Note 16
Financial statements - Notes to the consolidated financial statements
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:
Business segment
CGU
December 31, 2006
January 1, 2006
Stop Shop/Giant-Landover Arena
Peapod
20
22
Giant-Carlisle/Tops Arena
Giant-Carlisle
57
14
Albert Heijn Arena
Albert Heijn
123
33
Etos
2
3
Central Europe Arena
Czech Republic
24
20
Schuitema
Schuitema
12
3
Total retail
238
95
U.S. Foodservice
U.S. Foodservice
1,946
2,168
Ahold Group
2,184
2,263
For impairment testing purposes, all goodwill recognized
upon the acquisition of (and subsequent acquisitions by)
U.S. Foodservice was allocated as of January 1, 2006, to the
CGUs Broadline (EUR 2,086) and North Star Foodservice
(EUR 82). Following the announcement on November 6,
2006 that Ahold intends to divest U.S. Foodservice in a
single transaction, Ahold allocated this goodwill to the CGU
U.S. Foodservice for impairment testing purposes.
In addition to goodwill recognized at U.S. Foodservice,
brand names have been recognized upon acquisitions
with a carrying amount of EUR 13 and EUR 14 as of
December 31, 2006 and January 1, 2006, 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 10 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 7.5 percent for U.S.
Foodservice, 7.9 percent for retail operations in the United
States, 6.0 percent for the Netherlands and 7.4 percent for
the Czech Republic.
The impairment loss recognized in 2006 related to the CGU
Albert Heijn. The impairment loss recognized in 2005
related mainly to the CGU Tops (EUR 14).
88 Ahold Annual Report 2006
