1999 1998
Off-balance sheet obligations
Tenancy and operating leases 44 35
Assets on order, in so far as not included under
tangible fixed assets 57 59
Long-term raw materials purchase contracts 72 63
- Declarations of liability 208 213
Other off-balance sheet obligations 14 21
Financial instruments
Contract value on December 31
Currency hedging instruments US-dollars 690 429
Currency hedging instruments other currencies 180 371
Interest hedging instruments 219 355
Financial instruments are used in the normal course of business
to hedge the effects of fluctuations in exchange rates and interest
rates on earnings.The most important inflow of foreign currency is
denominated in US-dollars and is generated by export activities.
The expected net cashflow in US-dollars totalling some US-dollars
580 million on an annual basis, is hedged well in advance via
a combination of forward contracts and options. This policy
reduces the vulnerability of export proceeds and results from
term fluctuations in the US-dollar rate and delays inclusion of
long-term fluctuations in the result.
As far as possible, temporary cash surpluses are held centrally and
invested in bank deposits in Dutch guilders with a maximum term
of one year. The risk of reduction of the interest income on these
deposits due to a fall in the interest rate as well as the risk of
increase of interest expense due to a rise of interest rate of interest
bearing debts, is hedged to approximately 30% via use of interest
instruments. These interest hedging instruments comprise interest
rate swaps, forward rate agreements and caps and floors.
Implementation of the currency and interest policy is linked with
stringently defined policy and strict rules.
Only a limited number of counterparties is used, all with excellent
credit ratings. The activities are carefully monitored, independently
of implementation.
HEINEKEN N. V.
FINANCIAL
STATEMENTS
19 9 9
57