Deferred income taxes
Restructuring provisions
Other provisions
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the year plus the interest on the beginning of the year benefit obligation (a discounted measurement), net of the expected
return on plan assets.
In the event that the accumulated benefit obligation, calculated as the actuarial present value of the benefits attributed
to employee service rendered until the balance sheet date and based on historical compensation levels (i.e. without
assumptions of future compensation levels), exceeds the fair value of the plan assets and (i) such excess is greater than
the existing accrued pension liabilities, (ii) an asset has been recognized as prepaid pension cost, or (iii) no accrued or
prepaid pension cost has been recognized, such excess, plus any existing prepaid pension asset or minus any existing
accrued pension costs, is recognized as an additional minimum pension liability. The corresponding offset is recorded
as a separate component of the Company’s shareholders’ equity.
In certain areas of its business, the Company also provides postretirement benefits other than pensions. The cost relating
to such benefits consists primarily of the present value of the benefits attributed on an equal basis to each year of service,
interest cost on the accumulated postretirement benefit obligation, which is a discounted amount, and amortization of the
unrecognized transition obligation.
Pension information for all plans is presented in a form that is consistent with the relevant US GAAP standard, SFAS No.
132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits”. Ahold adopted this statement for plans
outside the U.S. for fiscal 2002 to unify its principles of accounting for these plans. The comparative balance sheet and
statement of operations have been restated to reflect the effect of a change in accounting policy, as permitted under
Dutch GAAP, and as further described in this Note and in Note 3.
All current and non-current deferred tax assets and liabilities of tax-paying components of the Company within each
particular tax jurisdiction are offset and presented as a single amount, respectively. Current deferred tax assets and
liabilities are not significant for the periods presented.
Obligations for contributions to defined-contribution pension plans are recognized as expenses as incurred in the
consolidated statements of operations.
Unrecognized prior service costs related to pension plans and postretirement benefits other than pensions are amortized by
assigning a proportional amount to the consolidated statements of operations over a number of years reflecting the average
remaining service period of the active employees.
Deferred income tax assets and liabilities are recorded for the estimated future tax consequences of events attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted
rates in effect in the year the temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of changes in tax rates is recognized in the Company’s statements of operations in the period of the
enactment of the change in tax rates. Deferred tax assets are recognized without a valuation allowance only to the extent
that it is probable that a benefit will be realized in the future based on currently available evidence. If a valuation
allowance is recorded against deferred tax assets related with an acquired entity’s deductible temporary differences or net
operating loss or tax credit carry forwards at the acquisition date, the subsequent realization of tax benefits for those items
is applied to (a) first, to reduce to zero any goodwill related to the acquisition, (b) second, to reduce to zero other
intangible assets related to the acquisition, and (c) third, to reduce income tax expense.
A restructuring provision is recognized when certain criteria are met. These include the existence of a detailed formal plan,
identifying at least (i) the business or part of a business concerned; (ii) the principal locations affected; (iii) the location,
function and approximate number of employees who will be compensated for terminating their services; (iv) the
expenditures that will be undertaken; and (v) the timing of when the plan will be implemented. Further, the Company must
raise a valid expectation with those affected that it will carry out the restructuring by starting to implement that plan or
announcing its main features to those affected by it. The provision is limited to termination payments to employees,
continuing rent obligations, and other expenditures necessarily entailed by the restructuring.
Ahold recognizes provisions for liabilities and probable losses that have been incurred as of the balance sheet date and
can be reasonably estimated. A provision is recognized when (i) the Company has a present obligation (legal or constructive)
