purchased the 1,207 DAIH shares pledged under all of the Secured Bank Loans (except the May 2002 Loan) at a price
of USD 260,000 per share and the 294 DAIH shares pledged under the May 2002 Loan at a price of USD 82,500 per
share. Of the 1,616 DAIH shares originally pledged to the Lenders under the Secured Bank Loans, we were obligated to
purchase 1,501 DAIH shares, which provided sufficient funds to the Lenders to pay off VRH's obligations under the
Secured Bank Loans.
Pursuant to the Note Sale Agreement, the Institutional Investors exercised their right to transfer their rights under the
USD 100 Million Loan to us. As a result, we paid the Institutional Investors USD 110 million (EUR 111 million), consisting
of the outstanding principal of the USD 100 Million Loan and interest thereon, plus the required payment for breakage
costs. The Institutional Investors transferred to us the rights under the related pledge of the 500 DAIH shares. We
purchased the 500 DAIH shares at a price of USD 40,000 per share in August 2002, with the purchase price being set
off against amounts owed by VRH to us under the USD 100 Million Loan.
In August 2002, we purchased from VRH the 115 DAIH shares remaining from the pledges of the Secured Bank Loans for
a total purchase price of USD 5 million (USD 40,000 per share), which was set off against remaining amounts owed by
VRH to us under the USD 100 Million Loan.
In connection with the foregoing transactions, we paid the Lenders and the Institutional Investors a total amount, including
interest, of USD 448 million (EUR 453 million). As a result of the foregoing transactions, we assumed full ownership of
DAIH.
We wrote off the USD 5 Million Loan in fiscal 2002. Since the purchase price for the DAIH shares referred to above
exceeded the fair value of the shares acquired, and as a result of writing off the USD 5 Million Loan, we recorded a
EUR 372 million loss in connection with these transactions in fiscal 2002.
The loss was calculated as follows:
(in USD millions, except as noted) Fiscal 2002
Cash paid to Lenders and Institutional Investors
448
Write-off of loan to VRH
5
Total
453
Fair value of 2,116 shares at USD 40,000 per share in August 2002
(85)
Loss on Default
368
Loss on Default in EUR millions
372
In addition, on December 15, 1999, VRH obtained a USD 25 million loan from a financial institution, the proceeds of
which were loaned to us and secured by a pledge of our promissory note to VRH (the "USD 25 Million Loan"). The
proceeds of the USD 25 Million Loan from VRH to us were used as part of the financing for purchasing shares of common
stock of Santa Isabel in connection with its rights offering.
The default by VRH under the Senior Bank Loans triggered a default under the USD 25 Million Loan. We repaid the
USD 25 Million Loan plus interest thereon owed by VRH. Concurrently, we were relieved of our liability to VRH under
our loan from VRH in the same amount. These off-setting amounts had no net accounting result and are not part of the
EUR 372 million loss.
Pension Plan Liability
Our contribution to our defined benefit plans in fiscal 2002 was EUR 121 million, an increase of EUR 44 million over
fiscal 2001. The increases in contributions are largely a result of maintaining appropriate funding levels to meet actuarial
expectations of future costs of our obligations under these plans. U.S. and European law prescribe minimum coverage
ratios of plan assets to liabilities. The increases in contributions are partly the result of maintaining these minimum
coverage ratios. The poor performance of the stock markets in fiscal 2002 and fiscal 2001 also had a negative influence
on the investment results of our pension funds, resulting in our increased contribution to the defined benefit plans.
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