2002 2001
Notes to the Consolidated Balance Sheet
Off-balance-sheet commitments
Tenancy and operating leases 48 56
Capital expenditure commitments, unless already
included in tangible fixed assets 53 84
Long-term raw material purchase contracts 176 186
Declarations of joint and several liability 398 286
Other off-balance-sheet commitments 29 12
Loan to Stichting Heineken Pensioenfonds 150 -
In 2003, a subordinated loan of €150 million will be
granted to Stichting Heineken Pensioenfonds to satisfy
the more stringent minimum reserves requirements of
the Pensions and Insurance Supervisory Board in the
Netherlands.
Financial instruments
Contract value as at 31 December
Currency hedging instruments in US dollars 904 1,321
Currency hedging instruments in other currencies 114 206
Interest-hedging instruments 1,029 925
Financial instruments are used in the normal course of
business to hedge the effects on results of fluctuations
in exchange rates and interest rates. The most important
foreign currency inflow is denominated in US dollars and
is generated by export activities. The expected net cash
flow in US dollars, which amounts to around USD 760
million per annum, is hedged well in advance by means of
a combination of forward contracts and options. This poli
cy reduces the volatility of export sales proceeds and
results due to short-term fluctuations in the value of the
US dollar against the euro and delays the impact of long-
term fluctuations on results. The financial instruments
used to hedge foreign exchange fluctuations, with a term
of longer than one year, amount to Cigo million. As far as
possible, temporary cash surpluses are held centrally and
invested in bank deposits in euros with maximum terms of
one year. Approximately 60% of the risk of a reduction
in interest income on these deposits due to a fall in the
interest rate or an increase in interest charges due to a rise
in the interest rate on interest-bearing liabilities is hedged
with interest rate instruments. These interest-hedging
instruments include interest rate swaps, forward rate
agreements and caps and floors. The interest-hedging
instruments with a term of more than one year amount
to €1,005 million. As at 31 December 2002, the aggregate
market value of the various financial instruments used
amounted to €83 million. Currency and interest rate risk
management is governed by a stringently defined policy
and strict rules. Only a limited number of counterparties
are used, all with excellent credit ratings. The activities
are closely monitored, independently of implementation.
FINANCIAL STATEMENTS 2002
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