In this section, in certain instances, in addition to presenting our results under Dutch GAAP, we also present changes
in net sales and operating income using constant exchange rates. When we use constant exchange rates, we present
information for the prior year using the same currency exchange rate as used in the current fiscal year in order to exclude
the impact of changes in exchange rates. The results we provide in constant exchange rates are not prepared in accordance
with Dutch GAAP. Each time we present results using constant exchange rates, we also provide the same information in
accordance with Dutch GAAP, as such information is presented in our financial statements. We believe that the use of
constant exchange rates provides useful information to our shareholders because it is the same measure used by our
internal decision makers and it provides a means to evaluate the operating performance of our segments and permits
comparisons of different periods without distortion due to currency exchange rates. Our use of constant exchange rates
may or may not be consistent with the method used by other companies. Shareholders should view information presented
using constant exchange rates as a supplement to, and not a substitute for, Dutch GAAP measures.
Under Dutch GAAP, consolidated net sales in fiscal 2002 were EUR 62.7 billion, representing net sales growth of 15.6%
over consolidated net sales of EUR 54.2 billion in fiscal 2001, which represents net sales growth of 32.8% over
consolidated net sales of EUR 40.8 billion in the prior fiscal year. Excluding the impact of currency exchange rates,
consolidated net sales in fiscal 2002 were EUR 62.7 billion, representing net sales growth of 20.8% over consolidated net
sales of EUR 51.9 billion in fiscal 2001. Excluding the impact of currency exchange rates, consolidated net sales in fiscal
2001 were EUR 54.2 billion, representing net sales growth of 31.2% over consolidated net sales of EUR 41.3 billion in
fiscal 2000.
Exceptional loss on related party default guarantee
Our operating expenses in fiscal 2002 included an exceptional loss of EUR 372 million relating to the default by VRH on
debt that we had guaranteed. In January 1998, we purchased a 50% interest in DAIH from VRH, a company controlled by
the Peirano family, for USD 368 million (EUR 408 million). The Peirano family also controlled other companies with
significant banking activities in Argentina and Uruguay. At the time of the purchase of our interest in DAIH in fiscal 1998,
DAIH owned 50.35% of Disco and 36.96% of Santa Isabel.
At the time of the purchase of our interest in DAIH, one of our subsidiaries, Croesus Inc. ("Croesus") (formerly Ahold U.S.A.,
Inc.), provided a USD 100 million loan to VRH bearing interest at 6% per annum and maturing on January 13, 2008 (the
"USD 100 Million Loan"). The USD 100 Million Loan was secured by a pledge of 500 DAIH shares owned by VRH. Pursuant
to the terms of a Note Sale Agreement and Transfer Deed, dated August 3, 1998 (the "Note Sale Agreement"), Croesus sold
all of its rights under the USD 100 Million Loan to Stichting Philips Pensioen Fonds and Nationale Nederlanden Levens
verzekering Maatschappij (the "Institutional Investors") and all other related rights (including the rights of Croesus related to
the pledged 500 DAIH shares) for USD 99 million (EUR 110 million). Under the Note Sale Agreement, upon the occurrence
of certain events, including a payment default by VRH on other indebtedness, the Institutional Investors had the right to sell
to us all of the Institutional Investors' rights in respect of the USD 100 Million Loan at a price equal to the aggregate
outstanding principal amount of the USD 100 Million Loan, together with interest accrued to the sale date, plus a
contractually required payment for breakage costs.
Subsequently, VRH obtained the following additional loans from various financial institutions (the "Lenders") (collectively,
the "Secured Bank Loans" and, together with the USD 100 Million Loan, the "VRH Loans"):
- On September 1, 1999, a USD 190 million loan, of which VRH borrowed USD 177 million, bearing interest per annum
at LIBOR plus a margin of 0.525% to 1.025% (depending upon our long-term senior unsecured debt rating), initially
maturing on September 1, 2000, subject to extensions for additional one-year terms, and secured by a pledge of 763
DAIH shares owned by VRH;
- On December 15, 1999, a USD 38 million loan, bearing interest per annum at LIBOR plus a margin of 1.0%, initially
maturing on December 16, 2000, subject to extensions for additional one-year terms, and secured by a pledge of 156
DAIH shares owned by VRH;
- On April 27, 2000, a USD 38 million loan, bearing interest per annum at LIBOR plus a margin of 1.0%, initially
maturing on April 28, 2001, subject to extensions for additional one-year terms, and secured by a pledge of 156 DAIH
shares owned by VRH;
- On June 9, 2000, a USD 28 million loan, bearing interest per annum at LIBOR plus a margin of 1.0%, initially maturing
on June 9, 2001, subject to extensions for additional one-year terms, and secured by a pledge of 117 DAIH shares
owned by VRH;
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