Food Lion 2008 Annual Report Download - page 101
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Please find page 101 of the 2008 Food Lion annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Foreign Exchange Forward Contracts
The Group uses currency forward contracts to manage certain parts of its currency exposures. These contracts are not designated as cash flow or fair value
hedges and are generally entered into for periods consistent with currency transaction exposures. Consequently, such derivatives do not qualify for hedge
accounting.
In 2008, Delhaize Group entered into several foreign exchange forward contracts to purchase at different dates in 2009 EUR 8 million in aggregate in exchange
of RON 30 million to offset the foreign currency risk on intercompany loans to Mega Image, denominated in RON.
Changes in the fair value of forward contracts are recorded in the income statement in “Finance costs” or “Income from Investments.”
21. Provisions
December 31,
(in millions of EUR) Note 2008 2007 2006
Closed stores: 22
Non-current 40 38 74
Current 11 13 10
Self-insurance: 23
Non-current 90 83 89
Current 32 28 29
Pension benefit and other post-employment benefits: 24
Non-current 74 64 81
Other:
Non-current 22 22 19
Current 6 1 3
Total provisions
Non-current 226 207 263
Current 49 42 42
22. Closed Store Provisions
As explained in Note 2, Delhaize Group records closed store provisions for present obligations in connection with store closing activities, which consist primarily of
provisions for onerous contracts and severance (“termination”) costs. The amounts recognized reflect management’s best estimate of the expected expenditures
required to settle the present obligation at balance sheet date and requires the application of judgment and estimates that could be impacted by factors such as
the discount rate applied, the ability to sub-lease, the creditworthiness of the sub-leasee or the success when negotiating any early termination of lease agree-
ments. Most of the factors are significantly dependent on general economic conditions and the interrelated demand for commercial property. Consequently, the
cash flows projected, and the risk reflected in those, might change, if applied assumptions change.
Most obligations recognized relate to onerous lease contracts, predominately for stores located in the United States, with remaining lease terms ranging from
one to 19 years. The average remaining lease term for closed stores was 4.6 years at December 31, 2008. Minor amounts, recognized in 2008, relate to termi-
nation benefits (zero in 2007 and 2006).
The following table reflects the activity related to closed store provisions:
(in millions of EUR) 2008 2007 2006
Closed store provision at January 1 51 84 115
Additions:
Store closings - lease obligations 6 4 6
Store closings - other exit costs 2 5 1
Update of estimates 1 - (3)
Interest expense (unwinding of discount) 4 5 9
Utilisation:
Lease payments made (11) (14) (21)
Lease terminations (3) (6) (8)
Payments made for other exit costs (2) (3) (4)
Transfer to other accounts - (17) -
Currency translation effect 3 (7) (11)
Closed store provision at December 31 51 51 84
During 2008, 2007 and 2006, Delhaize Group recorded additions to the closed store provision of EUR 8 million, EUR 9 million and EUR 7 million respectively,
primarily related to respectively 19, 26 and 27 store closings made in the ordinary course of business.
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Certification of Responsible
Persons
Historical
Financial Overview
Report of the
Statutory Auditor
Summary Statutory Accounts of
Delhaize Group SA
Supplementary
Information