00 Ahold ANNUAL REPORT 2002 163
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
As described in additional information, subsequent to fiscal year-end 2002, subsidiaries of Ahold entered into a new credit
facility, which replaced the 2002 Credit Facility. Amounts due under this new facility are guaranteed by Ahold and certain
of its subsidiaries.
At December 29, 2002, Ahold had granted EUR 391 of loan guarantees relating to the principal amounts of certain loans
payable by Ahold's subsidiaries. At December 30, 2001, the loan guarantees amounted to EUR 149. The guarantees have
been issued by Ahold to facilitate loan agreements between consolidated Ahold subsidiaries and third-party financiers and
the term of each guarantee is equal to the term of the related loan. Ahold's maximum liability under the guarantees equals
the total amount of the related loans recorded on the consolidated balance sheet.
As discussed in Note 24, Ahold also had provided guarantees of certain bonds issued by subsidiaries for a total amount
of EUR 2,463, USD 1,789 and GBP 500 as of December 29, 2002. The nature of these guarantees requires that Ahold
assumes the obligations under the bonds in the event of default by the subsidiary. The guarantees extend through the
dates of the related debt instruments.
Ahold had corporate guarantees of EUR 296 and EUR 168 at December 29, 2002 and December 30, 2001, respectively.
These guarantees have been provided to suppliers as assurance that the Ahold subsidiary's financial obligation, as detailed
in the underlying contract, will be met. Ahold would be required to perform under the guarantee if the subsidiary (or group
of subsidiaries) fails to meet the financial obligations under the contract, as described in the guarantee.
Ahold issued letters of assurance, comfort letters, real estate guarantees and buy-back guarantees, totaling EUR 230 and
EUR 188 at December 29, 2002 and December 30, 2001, respectively. Ahold granted letters of assurance and comfort
letters to suppliers and banks to acknowledge the Company's awareness and support of the transactions and relationships
entered into by its subsidiaries and franchisees. The real estate guarantees have been granted by Ahold for real property
leases of its subsidiaries. The buy-back guarantees have been granted by Ahold to facilitate external financing for
franchisees or subsidiaries. The liability under these guarantees is secured by the value of the related assets that the
Company could obtain and liquidate in the event Ahold has to perform under the guarantees.
Furthermore, the Company issued guarantees related to operating leases and capital leases of its subsidiaries. For a
discussion of capital leases, see Note 25. For a discussion of operating leases, see this Note 30 under rent commitments.
The Company is contingently liable for leases that have been assigned to various third parties in connection with facility
closings and asset dispositions. The Company could be required to assume these leases if any of the assignees are unable
to fulfill their lease obligations. Due to the wide distribution of the assignments among third parties and various remedies
available to the Company, management believes the likelihood that it will be required to assume a material amount of
these obligations is remote.
Subsequent to year-end 2002, on September 3, 2003, Albert Heijn issued a guarantee for a maximum amount of EUR 75
for the payment obligations to the AHVKF. Albert Heijn would be required to perform under the guarantee if Ahold
defaulted on its payment obligations to the AHVKF.
Albert Heijn and other Dutch companies are part of the fiscal unity for income taxes and for value added taxes of Ahold.
At December 29, 2002, the carrying amount of the liability related to income taxes and value added taxes within the fiscal
unity was EUR 116, which is recorded within income taxes payable on the consolidated balance sheet. The Company
would be required to perform if any of the entities within the fiscal unity defaulted on payment of the above-mentioned
liabilities.
The Company's wholly owned subsidiary, USF, deals with five value added service providers ("VASPs"). The VASPs provide
varying degrees of support to USF primarily in the procurement of private label and signature brand products. As part of its
normal business practice, the Company has guaranteed some of the obligations of the VASPs relating to purchases made
on behalf of USF. The maximum potential amount of future payments that the Company would be required to make under
the guarantees depends on the outstanding purchases made by the VASPs on behalf of USF, and would include product
that has not been delivered to USF and for which the liability remains unbilled. As of December 29, 2002, the guarantee
totaled approximately EUR 221. The Company would be required to reimburse the suppliers under the guarantee, if the
VASP fails to fulfill its payment obligations under any purchase orders to the supplier. Proceeds from the liquidation of
these goods are expected to be sufficient to cover the maximum potential amount of future payments under the
guarantees.
