Note 34
-
Financial statements - Notes to the consolidated financial statements
Capital investment commitments
Ahold had outstanding capital investment commitments for non-current assets of approximately EUR 392 and EUR 485 as of
December 31, 2006 and January 1, 2006, respectively.
Ahold's consolidated capital investment commitments by region as of December 31, 2006 were as follows:
Other
Total
property,
property,
Total
Land and
Machinery/
plant and
plant and
Intangible investment
Region
buildings
equipment
equipment
equipment
assets commitments
United States 166 87 57 310 - 310
Europe 64 2 3 69 13 82
Total
230
89
60
379
13
392
Expected payments relating to these commitments are as follows:
Region
2007
2008
2009
2010
2011
After 2011
Total
United States
251
15
14
17
13
310
Europe
54
19
4
3
1
1
82
Total
305
34
18
20
14
1
392
Purchase commitments
Ahold enters into purchase commitments with vendors in
the ordinary course of business. The Company has
long-term purchase contracts with some vendors for varying
terms that require the Company to buy services and
predetermined volumes of goods and goods not-for-resale at
fixed prices. As of December 31, 2006, the Company's
purchase commitments were approximately EUR 1,143,
which are not recorded on the consolidated balance sheets
(January 1, 2006: EUR 2,931). Not included in these
purchase commitments are those purchase contracts for
which Ahold has received advance vendor allowances, such
as up-front signing payments in consideration of its
purchase commitments. These contracts generally may be
terminated without satisfying the purchase commitments
upon repayment of the unearned portions of the advance
vendor allowances. The unearned portion of these advance
vendor allowances is recorded as a liability on the
consolidated balance sheets.
Guarantees
Guarantees to third parties issued by Ahold, primarily
covering liabilities and commitments of its subsidiaries, can
be summarized as follows:
Lease guarantees 906 943
Loan guarantees 13 32
Corporate and buyback guarantees 118 115
Total 1,037 1,090
Ahold is contingently liable for leases that have been
assigned to third parties in connection with facility closings
and asset disposals. Ahold could be required to assume
these leases if any of the assignees is unable to fulfill their
lease obligations. The lease guarantees are based on the
nominal value of future minimum lease payments of the
assigned leases. The lease guarantees disclosed in Ahold's
2005 Annual Report were based on discounted values of
such lease payments over the life of the lease using a
discount rate of 8 percent. On a discounted basis the lease
guarantees are EUR 586 and EUR 602 at December 31,
2006 and January 1, 2006, respectively. Of the EUR 906 of
lease guarantees, EUR 633 relates to the BI-LO/Bruno's
divestment. Due to the wide distribution of the assignments
among third parties and various remedies available to Ahold,
management believes the likelihood that it will be required
to assume a material amount of these obligations is remote.
Ahold assessed that the fair value of these lease guarantees
amounts to EUR 3 (January 1, 2006: EUR 2). As further
disclosed in Note 3, the fair values of these lease guarantees
have been recognized on the consolidated balance sheets as
financial guarantee contract liabilities. For information about
legal proceedings in connection with certain leases of
Bradlees Stores, Inc. that Ahold has guaranteed, see "Stop
Shop Bradlees Lease Litigation with Vornado" below in this
Note 34.
Loan guarantees relate to the principal amounts of certain
loans payable by Ahold's franchisees, non-consolidated real
estate development entities and joint ventures. The term of
most guarantees is equal to the term of the related loan.
Ahold's maximum liability under the guarantees equals the
total amount of the related loans recorded on the
consolidated balance sheets plus, in most cases, reasonable
costs of enforcement of the guarantee.
Ahold's corporate guarantees have been provided to certain
suppliers of Ahold's franchisees or non-consolidated entities.
Ahold would be required to perform under the guarantee if
the franchisee or non-consolidated entity failed to meet the
financial obligations, as described in the guarantee.
Buyback guarantees relate to Ahold's commitment to
repurchase stores or inventory from certain franchisees
at predetermined prices. The buyback guarantee
reflects the maximum committed repurchase value
under the guarantee.
December 31, January 1,
2006 2006
112 Ahold Annual Report 2006
