Ahold Announces Results of U.S. Foodservice Forensic Accounting Investigation

ZAANDAM, The Netherlands -- The U.S. Foodservice division of Ahold had overstated its earnings by $880 million, the retailer reported today.

Ahold said forensic accounting work being performed by Pricewaterhouse Coopers (PwC) as part of Ahold's internal investigation of U.S. Foodservice is now substantially complete, with the results being reported to Ahold's Audit Committee yesterday. Completion of the U.S. Foodservice forensic accounting work is a required step to recommence audit work at U.S. Foodservice to enable the completion of the Ahold 2002 audit by June 30, 2003.

For the period of April 1, 2000, the effective date of Ahold's acquisition of U.S. Foodservice, to December 28, 2002, PwC has identified total overstatements of pre-tax earnings of approximately $880 million. Of this amount, approximately $110 million relates to fiscal 2000, $260 million relates to fiscal 2001, and $510 million relates to 2002.

In addition, PwC identified approximately $90 million worth of adjustments required to be made to the opening balances for U.S. Foodservice at the date of its acquisition. This consists of a reclassification of such amount from current assets to goodwill primarily as a result of the required write-offs of vendor receivables. In connection with the earnings and opening balances adjustments, corresponding adjustments to the balance sheet of U.S. Foodservice as of December 28, 2002, will also be required. These adjustments will consist of $700 million of write-offs of accrued vendor receivables, an approximately $210 million increase in deferred contract revenue liabilities and an approximately $80 million increase in trade payables, as well as a $25 million increase in inventory.

Any other adjustments required with respect to U.S. Foodservice, including possible impairment of goodwill or other long-lived assets, will be determined by the company.
This ad will auto-close in 10 seconds