claim is NOK 445 (approximately EUR 55). Horn c.s. also allege breach of contract as a result of termination of the
contract by ICA Norge in October 2002. ICA Norge intends to respond to Horn c.s. on October 17, 2003, requesting the
claim be dismissed and bringing a counterclaim against Horn c.s. for not fulfilling their obligations under the contract.
The hearing of the case is not expected to commence until September 2004. The Company has determined that a loss
is not probable, although it is reasonably possible that the Company could incur losses or expenditures arising from this
matter in amounts that cannot be reasonably estimated.
Ahold and its subsidiaries are parties to a number of other legal proceedings and investigations that arose as a result of
its business operations. The Company believes that the ultimate resolution of these proceedings will not, in the aggregate,
have a material adverse effect on the Company's financial position, results of operations, or cash flows.
Contingent liabilities
Sale of Ahold's Operations Indonesia, Malaysia and Santa Isabel S.A. - Chile
Related to the sale of the assets of Ahold's operations in Malaysia, Indonesia, and Santa Isabel S.A. - Chile, the Company
has provided in the relevant sales agreement customary representations and warranties including but not limited to,
completeness of books and records, title to assets, schedule of material contracts and arrangements, litigation, permits,
labor matters and employee benefits and taxes. These representations and warranties will generally terminate, depending
on the specific representation and warranties, one to two years after the date of the relevant agreement. The claims under
the representation and warranties are capped at MYR 32 (EUR 8) for Malaysia and IDR 53,400 (EUR 6) for Indonesia.
The claims under the representations and warranties are capped at USD 30 for Chile.
Similar representations and warranties exist for smaller divestitures as described in the subsequent events paragraph in the
additional information. The aggregate impact of such representations and warranties is not expected to be material.
U.S. Foodservice
Various matters raised by the USF investigation were further reviewed to determine their impact, if any, on Ahold's
consolidated financial statements. One such matter relates to certain USF vendor invoicing practices. These practices
resulted in overbillings by various USF local branches of various vendors with respect to vendor allowances of
approximately USD 5 in fiscal 2002, USD 7 in fiscal 2001, USD 6 in fiscal 2000 and USD 13 in fiscal 1999 and prior
periods. Ahold has recorded an accrual to cover any refunds that Ahold or USF expects to be required to pay to vendors for
these overbillings, and has restated its financial statements for fiscal 2001 and 2000 with respect to these overbillings.
Other billing practices also were identified at USF that could result in other potential overbilling claims by vendors in an
amount totalling approximately USD 60. Ahold believes that USF may have defenses to this category of claims.
Accordingly, no liability has been accrued for this amount.
Lease Defaults
As a result of the issues that were announced on February 24, 2003, and related events, including our credit downgrades
and failure to publish our audited financial statements in a timely manner, the lessors under three of our equipment
operating leases delivered to us a notice of default. As of September 30, 2003, we have made aggregate payments of
approximately USD 7 million to lessors as a result of these breaches, have denied that we are in breach of other lease
contracts, and are currently negotiating with one of our lessors for a waiver of any defaults. If we are unable to obtain
waivers and are found to be in breach of these leases, we could be required to purchase the equipment covered by the
leases. Our total exposure as of September 30, 2003, would have been approximately USD 80 million. If required to make
these payments, we do not believe that they would have a material adverse effect on our financial condition, results of
operations and liquidity.
In addition, on March 7, 2003, we repaid amounts owing under an operating lease agreement used to finance the
acquisition and construction of two distribution centers and an office building, that was entered into by USF in July 1998,
and that we guaranteed, because the agreement had required us to maintain an investment grade rating. As a result, we
were required to purchase the trust which owned the leased properties for approximately USD 42 million.
Insurance
As a result of the issues that were announced on February 24, 2003, and related events, including our credit rating
downgrades and failure to publish our audited financial statements in a timely manner, the letter of credit and cash
collateral requirements required by third-party insurance companies for the fronting insurance necessary to operate our
existing insurance programs have increased from USD 10 million to USD 214 million for periods through December 2003.
In addition, surety companies have required us to provide collateral in the form of letters of credit totalling USD 100 million
for previously unsecured financial guarantee bonds (i.e., surety bonds relating to construction or permit obligations or to
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