Management's discussion analysis
CONTRACTUAL OBLIGATIONS
OFF-BALANCE SHEET ARRANGEMENTS
Guarantees
-
-
-
Trust on a revolving basis have been used to redeem the
short-term borrowings that have been recognized by the
Receivables Company. Losses in the form of discounts on
the sale of receivables, primarily representing interest,
totaled USD 26 million (EUR 21 million) and USD 17
million (EUR 14 million) in 2005 and 2004, respectively,
and are included in our consolidated statements of
operations in interest expense.
For a further discussion, see Note 21 to our consolidated
financial statements included in this annual report.
We have various contractual obligations and we must
include some of these as liabilities in our consolidated
balance sheets, including loans and short-term borrowings
and finance lease liabilities. There are others, including
operating lease commitments, capital investment,
commitments, purchase obligations and pension liabilities,
which we do not need to include as liabilities on our
consolidated balance sheets, but which we must disclose.
The following table summarizes our contractual obligations
as of January 1, 2006:
In addition to the obligations recorded on our balance sheet,
we have certain commitments and contingencies that may
result in future cash requirements. These include the capital
commitments, operating lease commitments, purchase
commitments and the other contractual obligations we
have discussed above. They also include (1) guarantees for
franchisees and for other third-parties and (2) the contingent
liabilities discussed below. For additional information about
our commitments and contingent liabilities, see Note 35 to
our consolidated financial statements included in this
annual report.
Guarantees to third parties have been issued by Ahold
totaling EUR 831 million and EUR 270 million as of
January 1, 2006 and January 2, 2005, respectively.
The increase in guarantees was mainly attributable to the
contingent liability associated with the divestment of the
BI-LO and Bruno's chains. All guarantees are corporate
guarantees and have been provided as assurance for an
Ahold subsidiary, franchisee, divested entity or joint venture.
For a further discussion on guarantees, see Notes 26, 27
and 35 to our consolidated financial statements included
in this annual report.
Payments due by period
Less than
1 More than
Euros in millions
Total
1 year
1-3 years
3-5 years
5 years
Loans including current portion 1
5,138
260
1,711
1,146
2,021
Short-term borrowings
597
597
Finance lease liabilities 2
1,362
64
121
121
1,056
Operating lease commitments 3
7,480
686
1,220
1,014
4,560
Capital investment commitments 4
485
394
66
17
8
Purchase commitments 5
2,931
1,141
1,434
203
153
Pension liabilities 6
4,110
142
297
323
3,348
Total 7
22,103
3,284
4,849
2,824
11,146
1 These amounts do not include a total of EUR 588 million of issued letters of credit as of January 1, 2006, all of which were issued under the May 2005 Credit Facility. These
amounts also exclude EUR 15 million of deferred financing costs. For more information on our loans, see Note 26 to our consolidated financial statements included in this
annual report.
2 Finance lease liabilities are principally for buildings. For more information on finance leases, see Note 27 to our consolidated financial statements included in this annual
report.
3 Operating lease commitments represent the minimum rents payable. Amounts are not offset by expected sublease income. For more information on operating leases, see Note
35 to our consolidated financial statements included in this annual report.
4 Capital investment commitments represent investments in land, building, improvements, property, plant and equipment. We had capital investment commitments outstanding
as of January 1, 2006 in the amount of EUR 119 million and EUR 366 million related to investments in Europe and the U.S., respectively.
5 Purchase commitments include open purchase orders outstanding as of January 1, 2006 for merchandise, both for resale and not-for resale, and other contracts with vendors
that contain minimum purchase requirements. This does not include purchase contracts for which we have received advance vendor allowances, which typically may be
terminated without satisfying the purchase commitments upon repayment of the unearned portions of the advance vendor allowances.
6 Pension liabilities represent the projected benefit obligation for our defined benefit plans. In addition to this obligation, we also had related plan assets with a fair value of
EUR 3.3 billion as of January 1, 2006. As a result, our unfunded obligation was EUR (0.8) billion as of January 1, 2006. For more information on pensions and other retirement
benefits, see Note 24 to our consolidated financial statements included in this annual report.
7 This does not include the USD 1.1 billion (EUR 937 million) relating to the settlement of the Securities Class Action, which is pending final court approval. The USD 1.1 billion
(EUR 937 million) includes USD 9 million (EUR 8 million) as compensation to the VEB for facilitating the global settlement. As a result of the settlement, we recorded a charge
in operating income in 2005 of EUR 803 million, which includes insurance proceeds.
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