Notes 21, 22
Financial statements - Notes to the consolidated financial statements
Accounts receivable securitization program
U.S. Foodservice and certain of its subsidiaries participate in
an accounts receivable securitization program. Under this
program, they sell, on a revolving basis, their receivables to a
wholly-owned, special purpose, bankruptcy remote
subsidiary of U.S. Foodservice ("Receivables Company")
which in turn transfers, assigns and conveys all of its present
and future rights, titles and interests in the receivables to a
trust (the "Master Trust"). Ahold consolidates the Master
Trust and consequently the transfer of the receivables is a
transaction internal to the Ahold group and the receivables
have not been derecognized from the consolidated balance
sheets. The Master Trust issued certificates, representing
fractional, undivided interests in the assets held in the
Master Trust, including the receivables. The certificates are
held by third-party investors (generally commercial paper
conduits, banks or other financial institutions) who have
purchased such certificates for cash or are held by the
Receivables Company. Certain of the certificates held by the
Receivables Company are subordinate interests to those
held by the third-party investors. The cash from the third-
party investors was included in Ahold's consolidated balance
sheets in cash and cash equivalents and amounts
corresponding to the certificates financed were recognized
under short-term borrowings. Included in Ahold's receivable
balance is USD 1,100 (EUR 833), which are the receivables
held by the Master Trust and effectively pledged collateral in
support of the securitization. The securitization program was
restructured as of June 29, 2006 to a three-year program
with the maximum purchaser group limit under the
securitization program being USD 816 (EUR 618) and with
a sub limit of USD 400 (EUR 303) for issuance of letters of
credits. There was USD 394 (EUR 299) outstanding in
issued letters of credit as of December 31, 2006.
The aggregate amount of outstanding balances under the
accounts receivable securitization program was nil and
USD 620 (EUR 524), as of December 31, 2006 and
January 1, 2006, respectively. The costs associated with
the sale of interests in the receivables ranged between
4.35 percent and 4.95 percent during 2006, plus fees and
expenses. Ahold received proceeds from the collection
under the accounts receivable securitization program of
USD 19,262 (EUR 14,593) and USD 18,005 (EUR 14,496)
in 2006 and 2005, respectively. Previously, on a revolving
basis, the proceeds received from the Master Trust were
used to redeem the short-term borrowings that had been
recognized by the Receivables Company. Included in cash
and cash equivalents in the balance sheets as of December
31, 2006 and January 1, 2006 were unredeemed proceeds
of USD 131 (EUR 99) and USD 122 (EUR 103), respectively.
Losses in the form of discounts on the sale of receivables,
primarily representing interest, totaled USD 8 (EUR 6) and
USD 26 (EUR 21) in 2006 and 2005, respectively, and are
included in the consolidated statements of operations in
interest expense.
Cash in banks and cash equivalents 1,483 1,837
Cash on hand 361 391
Total cash and cash equivalents 1,844 2,228
Cash and cash equivalents include all cash on hand
balances, checks, debit and credit card receivables that
process in less than seven days, short-term highly liquid
cash investments and time deposits with original maturities
of three months or less. Bank overdrafts are included in
short-term borrowings.
The effective interest rate on outstanding deposits included
in cash in banks and cash equivalents ranges from
3.55 percent to 5.15 percent (2005: 2.28 percent to
4.28 percent). Of the cash and cash equivalents as of
December 31, 2006 EUR 23 was restricted (January 1,
2006: EUR 23). This primarily consisted of cash held for
insurance purposes for U.S. workers' compensation and
general liability programs (EUR 21 and EUR 23 for 2006 and
2005, respectively). For a discussion of the receivables
collection proceeds held by Ahold under the accounts
receivable securitization program, see Note 21.
Ahold's banking arrangements allow the Company to fund
outstanding checks when presented to the bank for
payment. This cash management practice may result in a
net cash book overdraft position, which occurs when the
total issued checks exceed available cash balances within
the Group cash concentration structure. Such book
overdrafts are classified in accounts payable and amounted
to EUR 451 and EUR 517 as of December 31, 2006 and
January 1, 2006, respectively. No right to offset with other
bank balances exists.
22 Cash and cash equivalents
December 31, January 1,
2006 2006
92 Ahold Annual Report 2006
