Food Lion 2007 Annual Report Download - page 90

The maximum exposure of derivative financial instruments to credit risk at the
reporting date is EUR 52.8 million.
The following table indicates the contractual maturities associated with deriva-
tive financial instruments at December 31, 2007. The amounts presented for
cross currency swaps and foreign exchange forward contracts represent the
undiscounted notional amounts to be paid and received.
(in millions of EUR) 1-3 3 months- +5 Total
months 1 year years
Interest rate swaps
Assets - - 6.9 6.9
Liabilities - (0.5) - (0.5)
Cross currency swaps and foreign
exchange forward contracts
Amounts payable (3.6) (111.2) (455.3) (570.1)
Amounts receivable 3.6 110.6 500.0 614.2
Total - (1.1) 51.6 50.5
21. Provisions
December 31,
(in millions of EUR) 2007 2006 2005
Closed store provision:
Non-current 38.4 73.6 101.4
Current 12.5 10.4 13.9
Self-insurance provision:
Non-current 82.9 88.7 94.6
Current 28.0 28.8 36.4
Pension benefit and other
post-employment benefit provision:
Non-current 64.3 80.8 102.0
Other provisions:
Non-current 21.6 19.8 21.7
Current 1.3 2.5 2.2
Total provisions
Non-current 207.2 262.9 319.7
Current 41.8 41.7 52.5
Prior year amounts of current and non-current self-insurance provision have been
reclassed to more appropriately reflect payments expected to be made within
one year.
22. Closed Store Provisions
Delhaize Group records closed store provisions for the present value of post-
closing lease liabilities and other contractually obligated lease related costs
such as real estate taxes, common area maintenance and insurance cost, net of
estimated amounts to be recovered from subletting closed store space. Remaining
lease liabilities on closed stores generally range from one to 15 years. The average
remaining lease term for closed stores was 4.8 years at December 31, 2007. The
liability associated with each store is discounted using a pre-tax rate that reflects
the borrowing rate of debt with terms matching the terms of future rent payments.
The adequacy of the provision for closed stores is dependent on the Group’s ability
to sublet closed store property for the estimated recovery amount which may be
affected by changes in the economic conditions in the areas where closed stores
are located.
The following table reflects the activity related to closed store liabilities:
(in millions of EUR) 2007 2006 2005
Closed store provision
at January 1 84.0 115.3 118.0
Additions charged to earnings:
Store closings - lease obligations 4.1 5.5 8.5
Store closings - other exit costs 5.1 1.5 1.7
Adjustments to prior year
estimates (0.6) (2.8) 0.2
Interest expense 5.0 8.6 10.4
Reductions:
Lease payments made (14.3) (21.4) (23.3)
Lease terminations (5.8) (8.2) (13.4)
Payments made for other exit
costs (3.1) (3.6) (4.0)
Transfer to other accounts (16.8) 0.4 0.2
Amount classified as held for sale - (0.3) -
Currency translation effect (6.7) (11.0) 17.0
Closed store provision
at December 31 50.9 84.0 115.3
The provision for closed stores primarily relates to the closed store obligations
in the United States.
During 2007, 2006 and 2005, Delhaize Group recorded additions to the closed
store provision of EUR 9.2 million, EUR 7.0 million and EUR 10.2 million respec-
tively, primarily related to respectively 26, 27 and 32 store closings made in the
ordinary course of business.
The following table presents the number of closed stores and the changes in the
number of closed stores:
Number of Closed Stores
Balance at January 1, 2005 227
Store closings added 32
Stores sold/lease terminated (52)
Balance at December 31, 2005 207
Store closings added 27
Stores sold/lease terminated (53)
Balance at December 31, 2006 181
Store closings added 26
Stores sold/lease terminated (39)
Balance at December 31, 2007 168
Expenses recorded in the income statement and charged to closed store provision
were as follows:
(in millions of EUR) 2007 2006 2005
Other operating expenses 8.0 2.8 9.5
Interest expense included
in “finance costs” 4.5 7.7 9.4
Results from discontinued operations 1.1 2.3 1.9
Total 13.6 12.8 20.8
DELHAIZE GROUP / ANNUAL REPORT 2007
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