10. D erivative financial instruments
5. Inventories
Inventories are valued at the lower of cost (on a weighted average cost basis) or net realizable value. Inventories are written
down on a case-by-case basis if the anticipated net realizable value declines below the carrying amount of the inventories.
Such net realizable value corresponds to the anticipated estimated selling price less the estimated costs necessary to make
the sale. Whe n the reason for a write-down of the inventories has ceased to exist, the write-down is reversed.
6. Receivables and Payables
Amounts receivable and payable are recorded at their nominal value, less allowance for any amount receivable whose value
is considered to be impaired on a long-term basis. Amounts receivable and payable in a currency, other than the currency of
the Company, that are not hedged by a derivative instrument, are valued at the exchange rate prevailing on the closing date.
The resulting translation d iffe rence is writte n off if it is a loss and deferred if it is a gain.
Amounts receivable and payable in a currency other than the currency of the Company, and hedged by a derivative
instrument, are valued at the exchange rate fixed within the financial instrument with a consequence that there is no resulting
translation difference in the exchange rate.
7. Treasury shares
The purchase of treasury shares is recorded on the balance sheet at acquisition cost. hen at balance sh eet d ate the
market value is below the acquisition cost, the unrealized loss is recorded in the income statement. Upon sale, the
treasury shares are derecognized at their historical acquisition cost, less any recognized losses.
8. P rovision for Liabilities and C harges
Provision for liabilities and charges are recorded to cover probable or certain losses of a precisely determined nature but
whose amount, as of the balance sheet date, is not precisely known. They include, principally.
Pension obligations, early retirement benefits and similar benefits due to present or past employees
Taxation due on review of taxable income or tax calculations not already included in the estimated payable included in
the amounts due within one year
Significant reorganization and store closing costs
Charges for which the Company may be liable as a result of current litigation.
9. Debt Under Finance Leases and Similar Debts
At the end of each year, these commitments are valued at the fraction of outstanding deferred payments, corresponding to
the capital value of the assets, which mature within more than one year. The fraction of these payments contractually
maturing within less than one year is recorded under "Current portion of long-term debts."
The Company uses derivative financial instruments such as foreign exchange forward contracts, interest rate swaps and
currency swaps to manage its exposure on interest rate risks and foreign currency exchange risks relating to borrowings. Call
options are used to manage the exposure in relation to the exercise of the stock options granted to the entitled employees of
Delhaize Group SA/NV. The purchased call options are recognized on the balance sheet at acquisition cost which is in
general the paid premium. In case the option is exercised the recognized premium forms part of the acquisition cost of the
purchased treasury shares. However, in case the option expires and it is not exercised, then the recognized premium is
recorded as expense in the income statement.
For the measurement of the derivative financial instruments, Delhaize Group SA/NV does not apply the Mark-To-Market
method. Instead the foreign exchange forward contracts, the interest rate swaps and the currency swaps are measured in the
same way as the underlying exposures in accordance with the principle of accrual accounting. The accrued interest income
and expenses, the realized foreign exchange differences and the unrealized foreign exchanges losses are recognized in the
income statement in the same caption as the underlying exposure. On the other hand the unrealized foreign exchange gains
are deferred on the balance sheet in accordance with the principle of prudency.
In accordance with its internal policy, Delhaize Group SA/NV does not hold or issue derivative instruments for specula tive or
trading purposes.
Summary of the net earnings per share of Delhaize Group SA/NV.
2012 2011 2010
Net earnings per share 4.03 2.94 0.65
164 DELHAIZE GROUP FINANCIAL STATEMENTS '12
