2 www.ahold.com/reports2008
Notes to the consolidated financial statements
23 Provisions
-
-
-
-
-
-
-
Self-insurance program
Loyalty programs
Claims and legal disputes
Financial statements
AHOLD ANNUAL REPORT 2008 I 83
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 December 30, 2007
Current portion
110
10
23
44
7
2
196
Non-current portion
275
46
16
18
15
38
408
Carrying amount
385
56
39
62
22
40
604
Year ended December 28, 2008
Additions charged to income
107
23
6
12
27
12
187
Used during the year
(99)
(16)
(19)
(25)
(10)
(10)
(179)
Released to income
(14)
(3)
(5)
(2)
(3)
(27)
Interest accretion
8
3
2
2
1
16
Classified as held for sale or sold
(3)
(1)
(5)
(4)
(13)
Exchange rate differences
20
(2)
2
3
1
24
Closing carrying amount
418
52
20
48
37
37
612
As of December 28, 2008
Current portion
126
12
9
16
4
3
170
Non-current portion
292
40
11
32
33
34
442
Maturities of total provisions as of December 28, 2008 are as follows:
million
Self-
insurance
program
Loyalty
programs
Claims
and legal
disputes
Restructuring
Onerous
contracts
Other
Total
Amount due within one year
126
12
9
16
4
3
170
Amount due between two and five years
234
40
11
18
30
5
338
Amount due after five years
58
14
3
29
104
Total
418
52
20
48
37
37
612
Ahold is self-insured for certain potential losses, mainly relating to general liability, commercial vehicle liability and workers'
compensation relating to its U.S. subsidiaries. The maximum self-insurance retention per occurrence, including defense costs, is
USD 2 million (EUR 1 million) for general liability, USD 5 million (EUR 4 million) for commercial vehicle liability and USD 5 million
(EUR 4 million) for workers' compensation.
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 claims reporting patterns, claim settlement patterns, judicial decisions and legislation.
This provision relates to a third-party customer loyalty program in the Netherlands, which reflects the estimated cost of benefits
to which customers are entitled when they participate in the loyalty program.
The Company is party to a number of legal proceedings arising out of business operations. Such legal proceedings are subject
to inherent uncertainties. Management, supported by internal and external legal counsels, 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.
