Notes: 28
28 Related party transactions
156
Ahold Annual Report 2003
Financial Statements
Ahold has entered into arrangements with a number of its subsidiaries and affiliated companies in the course
of its business. These arrangements relate to service transactions and financing agreements. Transactions were
conducted at market prices, adjusted to reflect the volume of transactions and the relationship between parties.
The Company's wholly-owned subsidiary, USF, had product purchasing arrangements with five entities,
commonly referred to as value-added service providers (VASPs), that provided varying degrees of support to USF
primarily in the procurement of private label and signature brand products. As part of its normal business practice,
USF guaranteed some of the obligations of the VASPs to vendors relating to purchases made on behalf of USF. The
amount of future payments that USF would be required to make under the guarantees depends on outstanding
accounts payable to vendors for purchases made by the VASPs on behalf of USF.
During the third quarter of 2003, management of USF, decided to cease doing business with the VASPs by
early 2004 through a phased transition of services timeline. That decision was communicated to the VASPs prior to
December 28, 2003 and resulted in claims made by the VASPs for reimbursement by the Company of certain costs
they would incur as a result of this decision, principally employee severance and unavoidable lease commitments.
Since year-end 2003, USF has ended its relationship with four of the five VASPs and is not incurring any new
guaranteed obligations with respect to these prior arrangements. The fifth VASP continues to incur obligations which
are guaranteed by USF for the reasons and purposes described above.
USF has assumed or expects to assume certain liabilities and obligations of the VASPs in connection with the
phase out, and does not expect to be able to fully collect the amounts owed to USF by the VASPs. During the third
quarter of 2003 and subsequently, the VASPs quantified and reduced claims to writing and the Company accrued a
EUR 8 liability representing the probable minimum costs it expects to incur as a result of these claims. In December
2003, the Company entered into a Termination and Settlement Agreement relating to four of the five VASPs.
At December 28, 2003, the Company has recorded an accrual of approximately USD 20, reflecting the estimated
costs and relating expenses resulting from the settlement reached with four of the five VASPs, and anticipated
settlement with the remaining VASP entity.
As of December 28, 2003 and December 29, 2002, Ahold recorded accounts receivable due from the VASPs
of EUR 42 and EUR 116 and payables to the VASPs in the amount of EUR 72 and EUR 159, respectively.
Additionally, under the Dutch GAAP and US GAAP requirements, Ahold recorded VASP inventory and related trade
payables in the amount of EUR 54 and EUR 59 at December 28, 2003 and December 29, 2002, respectively.
Ahold recorded approximately EUR 2,607, EUR 2,800 and EUR 1,700, representing approximately 20%, 18%
and 16% of USF's cost of sales related to purchases through VASPs in 2003, 2002 and 2001, respectively.
The Company generated vendor allowances for the ICA joint venture, which amounted to EUR 8 in 2003
and EUR 6 in 2002. At the end of 2003 and 2002, amounts receivable from the ICA joint venture totaled EUR 5
and EUR 4, respectively. At the end of 2003 amounts payable to the ICA joint venture were EUR 12. Service income
in 2003 amounted to EUR 5 and service expense amounted to EUR 4 for shared information technology.
In the ordinary course of business, Luis Paez, an equity investee of Ahold, generated sales from transactions
with Ahold, which amounted to EUR 7 in 2003, EUR 7 in 2002 and EUR 7 in 2001. The Company provided
financing to Luis Paez and received interest from Luis Paez of EUR 3 in 2003, EUR 4 in 2002 and EUR 2 in 2001.
At the end of 2003 and 2002, amounts receivable from Luis Paez totaled EUR 77 and EUR 82, respectively. At the
end of 2003, amounts payable to Luis Paez totaled EUR 3.
Ahold provided financing to its joint venture JMR, and received interest from JMR of EUR 1 in 2003 and EUR 5
in 2002. At the end of 2003 and 2002, amounts receivable from Jéronimo Martins Retail Services AG totaled EUR 9
and EUR 42, respectively. At the end of 2003, amounts payable to JMR totaled EUR 1. Ahold also provided services
to Jéronimo Martins Retail Services AG, for which Ahold received EUR 4 in 2003, EUR 8 in 2002 and EUR 7 in
2001. In the ordinary course of business, Ahold generated vendor allowances for Jéronimo Martins Retail Services
AG, which amounted to EUR 1 in 2003.
Ahold has long-term receivables of EUR 5 from real estate joint ventures and rent payments of EUR 1 to real
estate joint ventures. In 2002 Ahold had no transactions with these joint ventures.
Paiz Ahold, a joint venture, provided financing to Ahold, and received interest of EUR 1 in 2002 and EUR 8
in 2001. At the end of 2002, amounts payable to Paiz Ahold totaled EUR 48. Ahold also had service transactions
with Paiz Ahold, for which Ahold received EUR 1 in 2002. Ahold had no transactions in 2003 with Paiz Ahold.
Starting in the second half of 2002, DAIH is included in the consolidated figures of Ahold. In the first half of
2002, Ahold received interest from DAIH for financing activities for a total amount of EUR 12 (2001: 22; 2000: 11).
At the end of 2001, amounts receivable from DAIH totaled EUR 390. Ahold also provided services to DAIH, for
which Ahold received EUR 1 in the first half of 2002 and EUR 2 in 2001.
Ahold also had service transactions with its equity investee Accounting Plaza B.V. ("Accounting Plaza"), which
rendered accounting and administrative services to certain Ahold subsidiaries in The Netherlands, amounting to
EUR 21 in 2003 and EUR 20 in 2002. During 2001 Accounting Plaza was a consolidated subsidiary, and therefore
