Food Lion 2012 Annual Report Download - page 129

DELHAIZE GROUP FINANCIAL STATEMENTS’12 // 127
20. Provisions
(in millions of €)
Note
December 31,
2012
2011(1)
2010
Closed stores:
20.1
Non-current
89
37
36
Current
18
9
8
Self-insurance:
20.2
Non-current
90
89
82
Current
52
54
39
Pension benefit and other post-employment benefits:
21
Non-current
126
90
80
Current
10
3
2
Other:
20.3
Non-current
64
73
35
Current
8
10
3
Total provisions
457
365
285
Non-current
369
289
233
Current
88
76
52
_______________
(1) 2011 was revised to reflect the effects of the completion in the second quarter of 2012 of the purchase price allocation of the Delta Maxi acquisition.
20.1 Closed Store Provisions
As explained in Note 2.3, 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-lessee or the success when negotiating any early termination of
lease agreements. 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 U.S., with remaining lease
terms ranging from 1 to 23 years. The average remaining lease term for closed stores was 5 years at December 31, 2012. The
following table reflects the activity related to closed store provisions:
(in millions of €)
2012
2011
2010
Closed store provision at January 1
46
44
54
Additions:
Store closings - lease obligations
131(1)
3
1
Store closings - other exit costs
12
—
—
Update of estimates
(15)
5
1
Interest expense (unwinding of discount)
7
4
4
Acquisition through business combination
—
2
—
Utilization:
Lease payments made
(27)
(12)
(14)
Lease terminations
(42)
—
(5)
Payments made for other exit costs
(13)
(1)
(2)
Transfer from (to) other accounts
11
—
—
Currency translation effect
(3)
1
5
Closed store provision at December 31
107
46
44
_______________
(1) Of which €3 million included in discontinued operations (see Note 5.3).
During 2012, Delhaize Group recorded €143 million of additions to the closed store provision, which were primarily related to the
store portfolio review announced at the beginning of 2012, resulting in the decision to close 146 stores (126 stores in the United
States and 20 underperforming Maxi stores) (see Note 28). During the year, additional stores were closed as part of the ordinary
course of business, resulting in 180 stores being closed during 2012.