Food Lion 2006 Annual Report Download - page 65

1. General Information
The principal operational activity of Delhaize Group (also referred to, with our
consolidated and associated companies, except where the context otherwise
requires, as “we,” “us,” “our” and “the Group”) is the operation of food super-
markets in North America, Europe and Southeast Asia. Delhaize Group’s sales
network also includes other store formats such as proximity stores and specialty
stores. In addition to food retailing, Delhaize Group engages in food wholesaling
to stores in its sales network and in retailing of non-food products such as pet
products and health and beauty products.
Delhaize Group’s ordinary shares are listed on Euronext Brussels under the symbol
“DELB” and Delhaize Group’s American Depositary Shares (“ADS”), as evidenced
by American Depositary Receipts (“ADR”), are listed on the New York Stock
Exchange (“NYSE”) under the symbol “DEG.”
The consolidated financial statements for the year ended December 31, 2006
as presented in this annual report were prepared under the responsibility of the
Board of Directors and authorized for issue on March 14, 2007 subject to approval
of the statutory non-consolidated accounts by the shareholders at the Ordinary
General Meeting to be held on May 24, 2007. In compliance with Belgian law,
the consolidated accounts will be presented for information purposes to the
shareholders of Delhaize Group at the same meeting. The consolidated financial
statements are not subject to amendment except conforming changes to reflect
decisions, if any, of the shareholders with respect to the statutory non-consoli-
dated financial statements affecting the consolidated financial statements.
2. Summary of Significant Accounting Policies
See Note 3 for a description of the change in accounting policy for defined benefit
plans.
Basis of Presentation
Delhaize Group’s consolidated financial statements are prepared in accord-
ance with International Financial Reporting Standards (IFRS) as adopted by
the European Union. These financial statements have been prepared under the
historical cost convention except for certain accounts for which IFRS requires
another convention, as disclosed in the corresponding notes.
Fiscal Year
Delhaize Group’s fiscal year ends on December 31. However, the year end of
Delhaize Group’s U.S. businesses is the Saturday closest to December 31. The
Group’s consolidated results of operations and balance sheet include that of
Delhaize America based on its fiscal calendar year. No adjustment has been made
for the difference in reporting date as the impact is immaterial to the consolidated
financial statements taken as a whole. The consolidated results of Delhaize Group
for 2006, 2005 and 2004 include the results of operations of its U.S. subsidiaries
for the 52 weeks ended December 30, 2006, 52 weeks ended December 31, 2005
and 52 weeks ended January 1, 2005, respectively. The results of operations of
the companies of Delhaize Group outside the United States are prepared on a
calendar year basis.
Group Accounting Policies
The consolidated financial statements are prepared using uniform accounting poli-
cies for like transactions and other events in similar circumstances. The accounts
of consolidated subsidiaries are restated as necessary to comply with the account-
ing policies adopted in the consolidated financial statements where such restate-
ment has a significant effect on the consolidated accounts taken as a whole.
Principles of Consolidation
All companies over which Delhaize Group can exercise control are fully con-
solidated. Delhaize Group owns directly or indirectly more than half of the voting
rights of all subsidiaries that are fully consolidated. Companies over which joint
control is exercised, as evidenced by a contractual agreement, are proportionately
consolidated. Companies over which Delhaize Group has significant influence
(generally 20% or more of the voting power) but for which it neither exercises
control nor joint control are accounted for under the equity method. Subsidiaries
are fully and joint ventures proportionately consolidated from the date on which
control or joint control is transferred to the Group. They are deconsolidated from
the date that control or joint control ceases.
Translation of Foreign Currencies
Delhaize Group’s financial statements are presented in euros, reflecting the par-
ent company’s functional currency. The balance sheets of foreign subsidiaries are
converted to euros at the year-end exchange rate (closing exchange rate). The
income statements are translated at the average daily exchange rate (i.e., the
yearly average of exchange rates on each working day). The differences arising
from the use of the average daily exchange rate for the income statement and
the closing exchange rate for the balance sheet are recorded in the “cumulative
translation adjustment” component of equity.
Foreign currency transactions are initially recognized at the exchange rate prevail-
ing at the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies are subsequently translated at the balance sheet exchange
rate. Gains and losses resulting from the settlement of foreign currency transac-
tions and from the translation of monetary assets and liabilities denominated in
foreign currencies are included in the income statement. Exchange differences
arising on monetary items that form part of a net investment in a foreign opera-
tion (i.e., items that are receivable from or payable to a foreign operation, for
which settlement is neither planned, nor likely to occur in the foreseeable future)
are recognized in the “cumulative translation adjustment” component of equity.
Exchange differences arising on the retranslation of non-monetary items carried
at fair value are included in the income statement except for differences arising
on the retranslation of non-monetary items in respect of which gains and losses
are recognized directly in equity. For such non-monetary items, any exchange
component of that gain or loss is also recognized directly in equity.

(in EUR) Closing Rate Average Daily Rate
2006 2005 2004 2006 2005 2004
1 USD 0.759301 0.847673 0.734160 0.796433 0.803800 0.803922
100 CZK 3.638348 3.448276 3.282563 3.528376 3.357732 3.135671
100 SKK 2.904022 2.639916 2.580978 2.685711 2.590746 2.498637
100 ROL - - 0.002539 - - 0.002469
100 RON(1) 29.555194 27.172436 - 28.362039 27.617466 -
100 THB 2.138123 2.059350 1.876595 2.101122 1.994243 1.995110
100 IDR 0.008443 0.008578 0.007864 0.008686 0.008269 0.008987
(1) As of July 1, 2005, the Romanian Leu (ROL) has been replaced by the New Romanian Leu (RON) in a ratio of 10,000 ROL = 1 RON
 / ANNUAL REPORT 2006 63