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Ahold Expects 'Significant Impact' from Accounting Scandal

AMSTERDAM - Dutch retailer Ahold today warned that the accounting scandal that broke earlier this year will have "a significant impact" on its 2003 results, according to a Dow Jones Newswires report. The grocery retailer said its loss last year totaled 4.33 billion euros ($5.02 billion) under U.S. generally accepted accounting principles, according to audited results filed with the U.S. Securities and Exchange Commission.

The loss last year was due largely to accounting improprieties disclosed earlier this year. Two weeks ago, Ahold said its 2002 net loss totaled 1.2 billion euros under Dutch accounting standards and it warned that the figure under GAAP would be sharply wider.

The gap stems largely from the different treatment of goodwill impairment at Ahold's U.S. Foodservice subsidiary. Under GAAP, Ahold booked an additional goodwill-impairment charge of 3.49 billion euros, of which 2.63 billion euros was related to the U.S. Foodservice unit, Ahold said.

Ahold said that professional fees of lawyers and accountants, together with refinancing costs, will have a significant impact on 2003 income.

Ahold also said it expects sales this year "will be negatively affected by the weak global economy and strong competition in the markets where we operate."

Ahold also announced today that it has completed the sale of Golden Gallon, its fuel and merchandise convenience-store operation in the southeastern U.S., to The Pantry Inc. for $187 million. The sale of Golden Gallon, announced in August, is part of Ahold's planned restructuring to focus on its core food businesses. Golden Gallon operates 138 convenience stores and has 1,100 employees.
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