24 Provisions
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-
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Ahold
Annual Report 2010
Group at a glance
Performance
Governance
Financials
Notes to the consolidated financial statements continued
The table below specifies the changes in total provisions (current and non-current):
million
Self-
insurance
program
Loyalty
programs
Claims
and legal
disputes
Restructuring
Onerous
contracts
Other
Total
As of January 3, 2010
Current portion
91
9
24
15
9
4
152
Non-current portion
324
38
13
36
138
35
584
Carrying amount
415
47
37
51
147
39
736
Year ended January 2, 2011
Additions charged to income
115
19
37
27
7
9
214
Used during the year
(97)
(15)
(22)
(20)
(24)
(5)
(183)
Released to income
(20)
(5)
(8)
(3)
(51)
(2)
(89)
Interest accretion
7
2
5
8
2
24
Effect of changes in discount rates
8
3
4
7
5
27
Exchange rate differences
30
2
3
9
2
46
Closing carrying amount
458
51
46
67
103
50
775
As of January 2, 2011
Current portion
78
10
13
23
24
4
152
Non-current portion
380
41
33
44
79
46
623
Maturities of total provisions as of January 2, 2011 are as follows:
million
Self-
insurance
program
Loyalty
programs
Claims
and legal
disputes
Restructuring
Onerous
contracts
Other
Total
Amount due within one year
78
10
13
23
24
4
152
Amount due between two and five years
227
35
19
18
53
10
362
Amount due after five years
153
6
14
26
26
36
261
Total
458
51
46
67
103
50
775
Self-insurance program
Ahold is self-insured for certain potential losses, mainly relating to general liability, vehicle liability, workers' compensation, and property
losses relating to its subsidiaries. The maximum self-insurance retention per occurrence, including defense costs, is $2 million (€1 million)
for general liability, $5 million (€4 million) for commercial vehicle liability, $5 million (€4 million) for workers' compensation and $5 million
(€4 million) for property losses.
Measurement of the provision for the self-insurance program requires significant estimates. These estimates and assumptions include an
estimate of claims incurred but not yet reported, historical loss experience, projected loss development factors, estimated changes in claim
reporting patterns, claim settlement patterns, judicial decisions, and legislation.
Loyalty programs
This provision relates to a third-party customer loyalty program in the Netherlands and reflects the estimated cost of benefits to which
customers participating in the loyalty program are entitled.
Claims and legal disputes
The Company is a party to a number of legal proceedings arising out of its business operations. Such legal proceedings are subject to
inherent uncertainties. Management, supported by internal and external legal counsel, where appropriate, determines whether it is more
likely than not that an outflow of resources will be required to settle an obligation. If this is the case, the best estimate of the outflow of
resources is recognized.
