Food Lion 2008 Annual Report Download - page 98
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Collateralization
The portion of Delhaize Group’s long-term debt that was collateralized by mortgages and security charges granted or irrevocably promised on Delhaize Group’s
assets was EUR 4 million at December 31, 2008 as well as 2007 and EUR 12 million at December 31, 2006, respectively.
At December 31, 2008, 2007 and 2006, EUR 17 million, EUR 13 million and EUR 30 million, respectively, of assets were pledged as collateral for mortgages.
Debt Covenants for Long-term Debt
Delhaize Group is subject to certain affirmative and negative covenants related to the debt instruments indicated above. Negative covenants include a mini-
mum fixed charge coverage ratio and maximum leverage ratios. At December 31, 2008, 2007 and 2006, Delhaize Group was in compliance with all such
covenants.
18. Short-term Borrowings
Short-term Borrowings by Currency
(in millions of EUR) December 31,
2008 2007 2006
U.S. dollar - 38 102
Euro 152 3 -
Total 152 41 102
The carrying amounts of short-term borrowings approximate their fair values.
U.S. entities
In 2005, Delhaize America, Inc. entered into an unsecured revolving credit agreement (“the Credit Agreement”), which provides the entity with a five-year
USD 500 million (EUR 359 million), unsecured, committed revolving credit facility, including a USD 100 million (EUR 72 million) sub-limit for the issuance of letters of
credit, and a USD 35 million (EUR 25 million) sub-limit for swingline loans. The aggregate maximum principal amount available under the Credit Agreement may
be increased to an aggregate amount not exceeding USD 650 million (EUR 467 million). Funds are available under the Credit Agreement for general corporate
purposes. The Credit Agreement will mature on April 22, 2010, unless Delhaize America, Inc. exercises its option to extend it for one additional year. In May 2007,
the facility was amended to have the financial covenants apply to Delhaize Group instead of to Delhaize America, Inc. The credit facility is guaranteed under the
cross guarantee agreement between Delhaize Group and Delhaize America, Inc.
Delhaize America, Inc. had no outstanding borrowings under the credit agreement as of December 31, 2008, USD 50 million (EUR 34 million) in outstanding
borrowings as of December 31, 2007 and USD 120 million (EUR 91 million) outstanding borrowings as of December 31, 2006.
Under this facility, Delhaize America, Inc. had average daily borrowings of USD 25 million (EUR 18 million) during 2008, USD 36 million (EUR 26 million) during
2007 and USD 31 million (EUR 25 million) during 2006. Approximately USD 1 million (EUR 1 million), of the Credit Agreement was used to fund letters of credit
during 2008 and 2007 and USD 47 million (EUR 37 million) during 2006. In addition of the Credit Agreement Delhaize America, Inc. had approximately USD 77
million (EUR 55 million) and USD 73 million (EUR 50 million) outstanding to fund letters of credit as of December 31, 2008 and 2007 respectively, and no amounts
outstanding at December 31, 2006.
In addition, Delhaize America, Inc. has periodic short-term borrowings under uncommitted credit facilities that are available at the lenders’ discretion and which
amounted to USD 120 million (EUR 86 million) at December 31, 2008. As of December 31, 2008, Delhaize America, Inc. had no borrowings outstanding under
such arrangements. There was USD 6 million (EUR 4 million) and USD 14 million (EUR 11 million) outstanding under these arrangements at December 31, 2007
and 2006 respectively.
European and Asian entities
At December 31, 2008, 2007 and 2006 the Group’s European and Asian entities together had credit facilities (committed and uncommitted) of EUR 621 million
(of which EUR 275 million of committed credit facilities), EUR 561 million and EUR 511 million, respectively, under which Delhaize Group can borrow amounts for
less than one year (Short-term Bank Borrowings) or more than one year (Medium-term Bank Borrowings).
The Short-term Bank Borrowings and the Medium-term Bank Borrowings generally bear interest at the inter-bank offering rate at the borrowing date plus a
pre-set margin, or based on market quotes from banks. In Europe and Asia, Delhaize Group had EUR 152 million in outstanding short-term bank borrowings at
December 31, 2008 compared to EUR 3 million in outstanding short-term bank borrowings at December 31, 2007 and no borrowings outstanding at December
31, 2006, respectively, with an average interest rate of 4.37% and 5.05%, respectively. During 2008, the Group’s European and Asian average borrowings were
EUR 106 million at a daily average interest rate of 5.0%.
Debt Covenants for Short-term Borrowings
Short-term borrowings require maintenance of various financial and non-financial covenants. In particular, the revolving line of credit agreement of Delhaize
America, Inc., contains affirmative and negative covenants applicable to Delhaize Group. Negative covenants include a minimum fixed charge coverage ratio, a
maximum leverage ratio and a dividend restriction test that limits the amount of dividends to 12.5% of consolidated earnings before interest, taxes, depreciation
and amortization for the current and prior year, unless the Group maintains a minimum credit rating.
At December 31, 2008, 2007 and 2006, Delhaize Group was in compliance with all covenants conditions.
19. Leases
As explained in Note 2, the classification of a lease agreement depends on the allocation of risk and rewards incidental to the ownership of the leased item.
When assessing the classification of a lease agreement, certain estimates and assumptions need to be made and applied, which include, but are not limited
Consolidated
Balance Sheets
Consolidated
Income Statements
Consolidated Statements of
Recognized Income and Expense
Consolidated
Statements of Cash Flows
94 - Delhaize Group - Annual Report 2008
Notes to the
Financial Statements