Food Lion 2007 Annual Report Download - page 84

At the end of 2007, the Board of Directors still had, pursuant to the authorization
granted in May 2007, an authorization to increase the capital by a maximum
of approximately EUR 9.7 million corresponding to approximately 19.4 million
shares.
To the extent permitted by law, the Board of Directors is authorized to increase
the share capital after it has received notice of a public takeover bid related to the
Company. In such a case, the Board of Directors is especially authorized to limit or
suppress the preferential right of the shareholders, even in favor of specific per-
sons. Such authorization was granted by the shareholders to the Board of Directors
for a period of three years expiring in May 2008.
Share Repurchases
As authorized by the Extraordinary General Meeting held on May 26, 2005, the
Board of Directors is authorized to purchase Delhaize Group ordinary shares where
such a purchase is necessary to avoid serious and imminent damage to Delhaize
Group. Such authorization will expire in June 2008.
In addition, on May 24, 2007, at an Extraordinary General Meeting, the Company’s
shareholders authorized the Board of Directors, in the absence of any threat or
serious and imminent damage, to acquire up to 10% of the outstanding shares of
the Company at a minimum share price of EUR 1.00 and a maximum share price
not higher than 20% above the highest closing price of the Delhaize Group share
on Euronext Brussels during the 20 trading days preceding the acquisition. This
authorization, which has been granted for 18 months, replaces the one granted
in May 2006. Such authorization also relates to the acquisition of shares of the
Company by one or several direct subsidiaries of the Company, as defined by legal
provisions on acquisition of shares of the Company by subsidiaries.
In May 2004, the Board of Directors approved the repurchase of up to EUR 200
million of the Company’s shares or ADRs from time to time in the open market, in
compliance with applicable law and subject to and within the limits of an outstand-
ing authorization granted to the Board by the shareholders, to satisfy exercises
under the stock option plans that Delhaize Group offers to its associates. No time
limit has been set for these repurchases.
Delhaize Group SA acquired 384,575 Delhaize Group shares (having a par value
of EUR 0.50 per share) in 2007 for an aggregate amount of EUR 25.8 million,
representing approximately 0.38% of Delhaize Group’s share capital and trans-
ferred 389,275 shares to satisfy the exercise of stock options granted to associ-
ates of non-U.S. operating companies. As a consequence, at the end of 2007,
the management of Delhaize Group SA had a remaining authorization for the
purchase of its own shares or ADRs for an amount up to EUR 143.3 million subject
to and within the limits of an outstanding authorization granted to the Board of
Directors by the shareholders.
Additionally, in 2007, Delhaize America repurchased 151,700 Delhaize Group ADRs
for an aggregate amount of USD 13.4 million, representing approximately 0.15% of
the Delhaize Group share capital as at December 31, 2007 and transferred 126,650
ADRs to satisfy the exercise of stock options granted to U.S. management pursuant
to the Delhaize America 2000 Stock Incentive Plan and the Delhaize America 2002
Restricted Stock Unit Plan.
At the end of 2007, Delhaize Group owned 938,949 treasury shares (including
ADRs), of which 402,674 were acquired prior to 2007, representing approximately
0.94% of the Delhaize Group share capital.
Delhaize Group provided a Belgian credit institution with a discretionary mandate
(the “Mandate”) to purchase up to 400,000 Delhaize Group’s shares on Euronext
Brussels between December 15, 2006 and November 24, 2007 in order to satisfy
exercises of stock options held by management of its non-U.S. operating compa-
nies. This credit institution made its decisions to purchase Delhaize Group shares
pursuant to the guidelines set forth in the Mandate, independent of further instruc-
tions from Delhaize Group, and without influence by Delhaize Group with regard
to the timing of the purchases. The credit institution was authorized to purchase
shares only when the number of Delhaize Group shares held by a custodian bank
fell below a certain minimum threshold contained in the Mandate.
Additionally, in 2006 Delhaize America engaged a U.S.-based financial institution
to purchase on its behalf up to 225,000 Delhaize Group ADRs on the New York
Stock Exchange during a period of up to one year beginning August 31, 2006. This
engagement was established to assist in the satisfaction of certain stock options
held by employees of U.S. subsidiaries of Delhaize Group and certain restricted
stock unit awards provided to U.S.-based executive employees. The financial
institution made its decisions to purchase ADRs under this agreement pursuant to
the guidelines set forth in a related share repurchase plan, independent of further
instruction from Delhaize America.
Retained Earnings
According to Belgian law, 5% of the statutory net income of the parent company
must be transferred each year to a legal reserve until the legal reserve reaches
10% of the capital. At December 31, 2007, 2006 and 2005, Delhaize Group’s legal
reserve was EUR 5.0 million, EUR 4.8 million and EUR 4.7 million, respectively, and
was recorded in retained earnings. Generally, this reserve cannot be distributed to
the shareholders other than upon liquidation.
The Board of Directors may propose a dividend distribution to shareholders of up
to the amount of the distributable reserves of the parent company, including the
profit of the last fiscal year, subject to the dividend restriction test (see note 18
on short-term borrowings). The shareholders at Delhaize Group’s Ordinary General
Meeting must approve such dividends.
Other Reserves
Other reserves include a deferred loss on the settlement of a hedge agreement
in 2001 related to securing financing for the Hannaford acquisition by Delhaize
America, and a deferred gain related to the 2007 debt refinancing. Both deferred
loss and deferred gain are being amortized over the life of the underlying debt
instruments. Other reserves also include actuarial gains and losses on defined
benefit plans and unrealized gains and losses on securities available for sale.
(in millions of EUR) December 31,
2007 2006 2005
Deferred gain/(loss) on
hedge:
Gross (16.0) (36.4) (46.1)
Tax effect 6.1 13.8 17.5
Actuarial gain/(loss) on
defined benefit plans:
Gross (6.0) (16.1) (32.2)
Tax effect 2.2 5.5 11.3
Amount attributable to
minority interest 0.3 0.8 0.5
Unrealized gain/(loss) on
securities held for sale:
Gross 1.6 (0.3) (0.3)
Tax effect (0.6) 0.1 0.1
Total other reserves (12.4) (32.6) (49.2)
Cumulative Translation Adjustment
The cumulative translation adjustment relates to changes in the balance of assets
and liabilities due to changes in the functional currency of the Group’s subsidiaries
relative to the Group’s reporting currency. The balance in cumulative translation
adjustment is mainly impacted by the appreciation or depreciation of the U.S. dollar
to the euro. The cumulative translation adjustment balance is as follows:
DELHAIZE GROUP / ANNUAL REPORT 2007
82