00 Ahold ANNUAL REPORT 2002 79
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
- on September 30, 2003, we repaid upon maturity our EUR 678.4 million 3.0% convertible subordinated notes issued by
us on September 30, 1998.
On May 2, 2003, we made a payment of ARS 125.9 million (approximately USD 44.6 million) with respect to our purchase
of the Ekono chain in Argentina on December 23, 1999. The total purchase price for Ekono was USD 150 million, of which
USD 90 million (including a retained amount of a maximum of USD 10 million for possible claims under the share
purchase agreement) was due in May 2003. As a result of Argentine legislation issued early in 2002, the USD 90 million
portion of the Ekono purchase price to be paid out in May 2003 was converted into Argentine Pesos at a USD 1 ARS 1
exchange rate, including the applicable inflation correction (CER inflation index). After applying this statutory conversion
rate and deducting an amount withheld for claims, the amount due amounted to ARS 125.9 million, which, at the
applicable exchange rate as of May 2, 2003, represented approximately USD 44.6 million. On April 28, 2003, civil
proceedings were initiated against DAIH in The Netherlands Antilles in which it has been alleged that Disco underpaid the
deferred portion of the Ekono purchase price by applying the Argentine legislation and also by improperly computing an
amount to be withheld from the purchase price to compensate for outstanding claims.
On July 22, 2003, we redeemed for an aggregate payment of USD 266.9 million, the USD 250 million 9.875% bonds
issued by Disco with an original maturity date of May 15, 2008, which payment included principal, interest and a premium
of USD 12.3 million. A total of USD 190.3 million of these bonds were held by Ahold België N.V, our wholly-owned
subsidiary. We determined it necessary to prepay these bonds to facilitate the disposal program for our Argentine
operations.
On August 11, 2003, we redeemed for approximately USD 25.9 million an Industrial Development Revenue Bond with an
original maturity date of December 1, 2026, entered into by Rykoff-Sexton, a predecessor to a wholly-owned subsidiary of
USF, in November 1996 in connection with the acquisition and construction of a distribution center in La Mirada,
California.
In addition to the foregoing repayment of debt, following the February 24, 2003 announcement and related developments,
including credit downgrades, we repaid certain operating leases prior to their stated maturity.
Equity and equity offerings
Shareholders' equity was EUR 2,609 million, EUR 5,496 million and EUR 2,352 million at fiscal year-end 2002, fiscal
year-end 2001 and fiscal year-end 2000, respectively. Shareholders' equity, stated as a percentage of total assets, was
10.5% at fiscal year-end 2002 compared to 19.2% at fiscal year-end 2001 and 10.9% at fiscal year-end 2000.
Shareholders' equity determined in accordance with US GAAP was EUR 8.5 billion at fiscal year-end 2002 compared to
EUR 15.5 billion at fiscal year-end 2001 and EUR 11.9 million at the end of fiscal 2000. The principal differences
between Dutch GAAP and US GAAP affecting shareholders' equity are the accounting treatments of goodwill, other
intangibles, sale and leaseback of property, derivatives investments, put options and investments in joint ventures and
equity investees. For additional information about our financial condition and results of operations under US GAAP, please
see our financial statements.
We did not complete any equity offerings during fiscal 2002. In September 2001, we completed an offering of common
shares and ADSs. We issued 80,500,000 common shares in the form of common shares and ADSs at an offering price of
EUR 31.90 per share and USD 28.38 per ADS, raising net proceeds of approximately EUR 2.5 billion, which were used to
partially finance the acquisition of Alliant and Bruno's in November and December 2001, respectively. In May 2000, we
completed a global offering of common shares and an issue of 4% convertible subordinated notes due 2005, in which we
issued 106,950,000 common shares at an offering price of EUR 26.00 per share, raising net proceeds of approximately
EUR 2.7 billion, which were used to partly repay borrowings used to finance in part our acquisition of USF and our 50%
partnership interest in ICA. In October 2000, we issued 115,317,164 cumulative preferred financing shares at an issue
price of EUR 3.50 per share, resulting in aggregate net proceeds of approximately EUR 395 million, which were used for
general corporate purposes in The Netherlands.
Other financing activities
Our primary market risk exposures are related to currency exchange rate and interest rate fluctuations and, to some extent,
commodity price fluctuations, which we manage through derivative financial instruments. We had 66 financial derivative
contracts outstanding as of fiscal year-end 2002. The notional amount of these contracts as of fiscal year-end 2002 was
EUR 4.7 billion and EUR 4.7 billion as of fiscal year-end 2001, with a positive mark-to-market value of EUR 47 million
as of fiscal year-end 2002 compared to negative EUR 363 million as of fiscal year-end 2001. Of these 66 contracts, at
