Notes to the consolidated financial statements
118
24 Provisions (continued)
Loyalty programs
Claims and legal disputes
Severance and termination benefits
Onerous contracts
Other
25 Other non-current liabilities
Ahold at a glance
Business review
Governance
Financials
Ahold
Annual Report 2015
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.
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.
This provision relates to payments to employees whose employment with the Company has ended, either as part of a restructuring or a voluntary separation plan. In 2015, Ahold recognized restructuring-related severance
provisions within Ahold USA totaling €31 million. These related to a reorganization of its support offices and an early retirement incentive program for store employees in the Giant Landover division.
Onerous contract provisions mainly relate to unfavorable lease contracts and include the excess of the unavoidable costs of meeting the obligations under the contracts over the benefits expected to be received under such
contracts. Included in the balance of the provision as of January 3, 2016, were provisions of €65 million and €44 million in Ahold USA and the Czech Republic, respectively, for unfavorable lease contracts recognized as part
of the A&P, SPAR and other past acquisitions as well as the remaining provision relating to BI-LO and Bruno's (see Note 34) of €19 million.
Other provisions include asset retirement obligations, provisions for environmental risks, jubilee payments, and supplemental medical benefits.
January 3,
December 28,
million
2016
2014
Step rent accruals
276
234
Deferred income
25
26
Other
17
16
Total other non-current liabilities
318
276
Step rent accruals relate to the equalization of rent payments from lease contracts with scheduled fixed rent increases throughout the life of the contract.
Deferred income predominantly represents the non-current portions of deferred income on vendor allowances and deferred gains on sale and leaseback transactions.
