16
€270 million
Ahold
Annual Report 2010
Group at a glance
Group performance continued
Governance
Fi nancials
Investors
Restructuring and related charges
Restructuring and related charges were as follows in 2010 and 2009:
Net interest expense
2010 2009
million million
Ahold USA
(20)
1
The Netherlands
Other Europe
(4)
(24)
Ahold Europe
(4)
(24)
Total
(24)
(23)
In 2010, restructuring and related charges at Ahold USA primarily related to the organizational
changes announced in November 2009. In 2009, restructuring and related charges primarily
resulted from the closure of underperforming stores and the downsizing of large hypermarkets in
the Czech Republic.
Net financial expense
Net financial expense decreased by €24 million compared to 2009, as a result of lower interest
expense, partially offset by lower interest income following lower average yields on our
outstanding cash balances. Interest expense, at €288 million, was down €28 million following
significant debt reductions in 2009 (€0.5 billion) and 2010 (€0.4 billion), partially offset by a
stronger U.S. dollar against the euro in 2010. Net interest expense was €270 million, at the
mid-point of our guidance (at constant exchange rates, net interest was at the lower end of
our guidance).
Income taxes
In 2010, income tax expense was €271 million compared to €148 million last year. The effective
tax rate, calculated as a percentage of income before income taxes, was 25.2 percent
(14.6 percent in 2009). The lower effective tax rate in 2009 was primarily the result of the
recognition of €101 million in deferred tax assets primarily arising from U.S. net operating losses
carried over from previous years.
Share in income of joint ventures
Ahold's share in income of joint ventures of €57 million decreased by €49 million compared to last
year. These results primarily relate to our 60 percent shareholding in ICA and our 49 percent
shareholding in JMR. Improved operating results at both ICA and JMR were more than offset by
a tax provision recognized by ICA following an adverse court ruling (Ahold's share €47 million, for
more information, see Note 34 to the consolidated financial statements), and a provision against
deferred tax assets at ICA Norway (Ahold's share €42 million). You can read more about ICA's
and JMR's results in Performance by segment.
Loss from discontinued operations
Results from discontinued operations in 2010 and 2009 were most significantly impacted by
Ahold's former subsidiaries, BI-LO and Bruno's, filing for protection under Chapter 11 of the U.S.
Bankruptcy Code in 2009. This resulted in the recognition of a €62 million provision, after tax, in
2009, which represented our best estimate of our obligations under various lease guarantees.
In 2010, following various developments in the BI-LO and Bruno's bankruptcy proceedings (as
further described in Note 34 to the consolidated financial statements), we reduced our provision
by €23 million, after tax.
In 2010 and 2009, results from discontinued operations were also impacted by various
adjustments to the results of prior years' divestments (primarily U.S. Foodservice and Tops), as
a consequence of warranties and indemnifications provided in the relevant sales agreements.
For further information about discontinued operations, see Note 5to the consolidated financial
statements.
