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ID NEWS: Analysts see major goodwill write-downs for USF

Royal Ahold, Zaandam, The Netherlands, could face up to 2 billion euros of goodwill write-downs at its broadliner subsidiary, U.S. Foodservice, Columbia, MD, according to analysts cited by Reuters. The write-downs will reflect the value of the national distributor after overstated profits of $880 million are taken into account.

While the write-downs are expected to force Ahold to accelerate asset sales, they are unlikely to impact a credit line of 3.1 billion euros. The international grocer and foodservice distribution company must meet reporting deadlines and keep cash earnings at above 2.5 times its interest costs in order to retain the bank standby facility.

Ahold bought USF for $3.6 billion in April 2000, PYA/Monarch, Columbia, SC, for $1.57 billion cash in December 2000, and Alliant Exchange, Deerfield, IL, for $2.2 billion in November 2001. USF also acquired other, smaller though substantial broadliners during the last two years.

Late last week, Ahold announced first quarter results, in which USF was down in sales a less-than-expected 1.5%, for a total of $5.3 billion in business for the 16-week period ended April 20. (See upcoming ID Management Report, 5/2/03).

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