Food Lion 2005 Annual Report Download - page 62

Fair Value of Long-term Debt
The fair value of the Group’s long-term debt is based on the current market quotes
for publicly traded debt and estimated rates for non-public debt, reflecting cur-
rent market rates offered to the Group and its subsidiaries for debt with similar
maturities:
(in m illions of EUR) December 31,
2005 2004 2003
Fair value of long-term debt 3,485.9 3,252.7 3,084.4
Carrying value of long-term debt
Current 658.3 10.8 10.1
Non-current 2,546.4 2,773.0 2,719.4
Total 3,204.7 2,783.8 2,729.5
Collateralizations
The portion of Delhaize Group’s long-term debt that were collateralized by mort-
gages and security charges granted or irrevocably promised on Delhaize Group’s
assets was EUR 7.1 million, EUR 7.3 million and EUR 20.4 million at December 31,
2005, 2004 and 2003 respectively.
At December 31, 2005, 2004 and 2003, EUR 13.1 million, EUR 16.6 million and
EUR 51.7 million respectively, in assets were pledged as collateral for mort-
gages.
Debt Covenants
Delhaize Group is subject to certain affirmative and negative covenants related to
debt instruments indicated above. Negative covenants include a minimum fixed
charge coverage ratio and maximum leverage ratios. At December 31, 2005, 2004
and 2003, Delhaize Group was in compliance with all such covenants.
18. Short-term Borrowings
(in m illions of EUR) December 31,
2005 2004 2003
Short-term bank borrowings 0.1 28.1 84.1
Short-term treasury program notes - - 153.0
Total 0.1 28.1 237.1
On April 22, 2005, Delhaize America entered into a USD 500 million
(EUR 423.8 million) five-year unsecured revolving credit agreement, replacing and
terminating the USD 350 (EUR 296.7 million) secured credit agreement maturing
July 2005. The revolving credit facility bears interest at the USD London Interbank
Offering Rate (US Libor) plus 0.825% and includes a facility fee of 0.175%.
The credit agreement contains affirmative and negative covenants. Negative
covenants include a minimum fixed charge coverage ratio and a maximum lever-
age ratio. As of December 31, 2005, Delhaize America was in compliance with all
covenants contained in the credit agreement. Delhaize America had no outstand-
ing borrowings under this credit agreement at December 31, 2005 and had no
borrowings during 2005 under this facility.
At December 31, 2004 and 2003, Delhaize America had a revolving credit facil-
ity with a syndicate of commercial banks providing USD 350 million (EUR 296.7
million) in committed lines of credit. The credit facility was secured by certain
inventory of Delhaize America’s retail operating subsidiaries. The facility con-
tained affirmative and negative covenants. At December 31, 2004 and 2003,
Delhaize America was in compliance with all covenants contained in the credit
facility. Delhaize America had no outstanding borrowings under the facility at
December 31, 2004 and 2003 and had no borrowings during 2004 or 2003.
At December 31, 2005, 2004 and 2003, the Group’s European and Asian companies
together had credit facilities (committed and uncommitted) of EUR 409.3 million,
EUR 507.1 million and EUR 655.3 million respectively, under which Delhaize
Group can borrow amounts for less than one year (Short-term Bank Borrowings)
or more than one year (Medium-term Bank Borrowings). The Short-term Bank
Borrowings and the Medium-term Bank Borrowings – see Note 17 (collectively
the “ Bank Borrowings”) generally bear interest at the inter-bank offering rate at
the borrowing date plus a pre-set margin, or based on market quotes from banks.
In Europe and Asia, Delhaize Group had EUR 0.1 million, EUR 28.1 million and
EUR 84.1 million in outstanding short-term Bank Borrowings at December 31,
2005, 2004 and 2003, with an average interest rate of 3.45%, 3.09% and 3.18%
respectively at December 31, 2005, 2004 and 2003. During 2005, the Group’s
Europe and Asia average borrowings were EUR 7.1 million at a daily average
interest rate of 2.8%.
The Bank Borrowings require maintenance of various financial and non-financial
covenants. At December 31, 2005, 2004 and 2003 Delhaize Group was in compli-
ance with all such covenants.
In Belgium, Delhaize Group had no short-term notes outstanding under the
EUR 500 million Treasury Program (see Note 17) at December 31, 2005 and 2004,
compared to EUR 153.0 million at December 31, 2003.
Short-term Borrowings by Currency
(in m illions of EUR) December 31,
2005 2004 2003
U.S. dollar - 4.8 4.6
Euro 0.1 15.5 218.1
Other currencies - 7.8 14.4
Total 0.1 28.1 237.1
19. Leases
Delhaize Group’s stores operate principally in leased premises. Lease terms
generally range from three to 27 years with renewal options ranging from three
to 27 years. The average remaining lease term for closed stores was 5.7 years at
December 31, 2005. The following schedule details, at December 31, 2005, the
future minimum lease payments:
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