Food Lion 2008 Annual Report Download - page 79
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of long-term employee benefit plans other than pension plans is the amount of future benefit that employees have earned in return for their services in the
current or prior periods. Such benefits are discounted to determine their present value, and the fair value of any related asset is deducted. The calculation is
performed using the projected unit credit method and any actuarial gain or loss is recognized in the SoRIE in the period in which they arise. These obligations
are valued annually by independent qualified actuaries. See for details of Delhaize Group’s other post-employment benefit plans Note 24.
• Termination benefits: are recognized when the Group is demonstrably committed, without realistic possibility of withdrawal, to a detailed formal plan to ter-
minate employment before the normal retirement date. In addition, Delhaize Group recognizes expenses in connection with termination benefits for voluntary
redundancies if the Group has made an offer of voluntary redundancy, if it is probable that the offer will be accepted and the number of acceptances can be
measured reliably.
• Profit-sharing and bonus plans: the Group recognizes a liability and an expense for bonuses and profit-sharing based on a formula that takes into consid-
eration the profit attributable to the company’s shareholders after certain adjustments. The Group recognizes a provision if contractually obliged or if there is
a past practice that has created a constructive obligation.
• Share-based payments: the Group operates various equity-settled share-based compensation plans, under which the entity receives services from employ-
ees as consideration for equity instruments (options or warrants) of the Group (see Note 29). The fair value of the employee services received in exchange
for the grant of the share-based awards is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the
share-based awards and is calculated using the Black-Scholes-Merton valuation model. The share-based compensation plans operated by Delhaize Group
do not contain any non-market vesting conditions, but service vesting conditions alone.
The total amount expensed is recognized in the income statement - together with a corresponding increase in equity - over the vesting period of the share-
based award, which is the period over which all of the specified vesting conditions are to be satisfied. The cumulative expense recognized for equity-settled
transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the
number of equity instruments that will ultimately vest. At each balance sheet date, the Group revises its estimates of the number of options that are expected to
vest. Delhaize Group recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
In the event of a modification of the terms of an equity-settled award, the minimum expense recognized is the expense as if the terms had not been modified.
An additional expense would be recognized for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise
beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is
recognized immediately. However, in case that a new award is substituted for the cancelled award, and designated as a replacement award on the date that
it is granted, the cancelled and new awards are treated as if they were a modification of the original award.
Any proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when options are
exercised.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received, excluding discounts, rebates, and sales taxes or duty.
• Sales of products to the Group’s retail customers are recognized at the point of sale and upon delivery of groceries to internet or telephone order customers.
In addition, Delhaize Group generates revenue from sales to its wholesale customers, which are recognized upon delivery.
As stated above, sales are recorded net of sales taxes, value-added taxes and discounts and incentives. These include discounts from regular retail prices
for specific items and “buy one, get one free” incentives that are offered to retail customers through the Group’s customer loyalty programs. Loyalty programs
also exist whereby customers earn points for future purchases. Discounts provided by vendors, in the form of manufacturer’s coupons, are recorded as a
receivable. Revenue from the sale of gift cards and gift certificates is recognized when the gift card or gift certificate is redeemed by the retail customer.
• TheGroupgenerateslimitedrevenuesfromfranchise fees, which are recognized when the services are provided or franchise rights used.
• Forcertainproductsorservices,suchasthesaleoflotterytickets,third-partyprepaidphonecards,etc.,DelhaizeGroupactsasanagentandconsequently
records the amount of commission income in its net sales.
• Rental income from investment property is recognized in profit or loss on a straight-line basis over the term of the lease and included in “Other operating
income” (see Note 32).
• Interest Income is recognized as interest accrues (using the effective interest method) and is included in “Income from investments” (see Note 35).
• Dividend income is recognized when the Group’s right to receive the payment is established. The income is included in “Income from investments” (see Note
35).
Cost of Sales
Cost of sales includes purchases of products sold and all costs associated with getting the products into the retail stores, including buying, warehousing and
transportation costs. Finally, Cost of sales includes appropriate vendor allowances (see also accounting policy for “Inventories” above).
Selling, General and Administrative Expenses
Selling, general and administrative expenses include store operating expenses, costs incurred for activities which serve securing sales, administrative and
advertising expenses.
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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