Notes: 18
138
Ahold Annual Report 2003
Financial Statements
Accounts Receivable Securitization Programs
The Company's wholly-owned subsidiaries, USF and Alliant, participate in separate receivables sale and related
agreements ("Receivables Agreements"). Under the Receivables Agreements these subsidiaries sell, on a revolving
basis, their eligible trade receivables to two companies, which are wholly-owned, special purpose, bankruptcy
remote subsidiaries of the Company ("Receivables Companies"). Simultaneously, the Receivables Companies
transfer, assign and convey all of their present and future right, title and interest in the receivables to two qualifying
special purpose entities (the "Master Trusts"). In return for the receivables transferred, the Receivables Companies
receive cash and certificates representing fractional, undivided interests in the accounts receivable held in the
Master Trusts. Certain certificates, representing fractional, undivided interests in the accounts receivable held by
the Master Trusts, are sold to third-party investors in exchange for cash. The Receivables Companies hold other
certificates which are subordinate to the interest of the third-party investors. The interests purchased by third-party
investors include both variable investment certificates, which may be increased up to a maximum purchase
commitment of USD 490 (EUR 394), and USD 300 (EUR 241) term investment certificates, aggregating to a
maximum purchase limit of USD 790 (EUR 636). The purchasers of the variable certificates are generally either
commercial paper conduits, which may choose to increase the amount invested in a certificate, or banks or other
financial institutions that commit, subject to certain conditions, to fund increases in respect of the certificates for
a committed period of time. The transferable term certificates were sold in reliance on Rule 144A to qualified
institutional buyers in July 2000 and are scheduled to expire in May 2005.
As of year-end 2003 and year-end 2002, the Receivables Companies sold USD 732 (EUR 589) and USD 856
(EUR 693), respectively, of its interests under the Receivables Agreements to third-party certificate holders. The
costs associated with the sale of accounts receivable interests in the Master Trusts are based on existing markets
for A-1/P-1 asset-backed commercial paper rates in respect of sales of commercial paper conduits, which ranged
between 1.07% and 1.40% during 2003, plus fees and expenses. In respect of purchasers other than the
commercial paper conduits the costs associated with the sale of accounts receivable interests in the Master Trusts
are based on LIBOR plus fees and expenses. Because commercial paper conduit purchasers of variable certificates
have no commitment to maintain the funding of their purchases of interests in the Master Trusts, in the event these
purchasers refuse or are unable to fund the purchase of the Master Trusts interest with commercial paper, the costs
associated with the sale of such interests to the alternative committed purchasers will be based upon the sum of
LIBOR and an additional amount based on the Company's then-current credit rating.
During 2002, the above described transfer of all trade receivables, the subsequent conveyance of Ahold's
interest in those receivables to the Master Trusts and the issuance of certificates sold to third-party investors
qualified as a sale in accordance with Dutch GAAP. Accounts receivable sold under these arrangements were
excluded from the accounts receivable in the consolidated balance sheet. As a result, for 2002 and the first quarter
of 2003, the Company de-recognized the interest in the accounts receivable held by the Master Trusts and
subsequently sold to third parties and the funding associated with these interests. On July 10, 2003, the agreement
related to the receivables sale for the Receivables Program of USF ("USF Program") was amended and restated to
grant USF the unilateral right to call the issued certificates. As a result of that amendment, the sale of the applicable
interest in the accounts receivable of the Master Trust to third parties and the associated funding no longer qualified
for de-recognition. Ahold therefore became required to reflect these amounts on the Company's balance sheet
beginning with the second quarter of 2003. No such changes took place with the Receivables Program of Alliant
("Alliant Program"). Therefore, the interest in the accounts receivable held by the Alliant Master Trust sold to third
parties and the associated funding is de-recognized from the Company's balance sheet.
As a result of the recognition of the USF Program as described above the Company now includes accounts
receivable of USD 404 (EUR 325) in its trade accounts receivable and the associated variable investment certificate
of USD 404 (EUR 325) as short-term debt as of year end 2003. In 2002 Ahold's retained interest in this Master
Trust was USD 133 (EUR 127). Ahold's retained interest in the assets of the Alliant Program as of year-end 2003
and year-end 2002, was approximately USD 113 (EUR 91) and USD 84 (EUR 81), respectively. These retained
interests, which Ahold includes in the accounts receivable balance reflected in the consolidated balance sheets,
are recorded at estimated fair value and approximate the carrying amount of the retained interests because of the
immediate or short-term maturity of the assets underlying the certificates. Further, the fair value of the retained
interest is not significantly affected by changes in the discount rate assumption used in the fair value assessment
because of the short-term nature, approximately 30 days, of the underlying receivables. The fair value of the
retained interests in the assets of the Master Trusts is reviewed on an ongoing basis for outstanding and newly
securitized receivables.
