Foreign Exchange Forward Contracts
Delhaize Group Annual Report 2014 129
(both variable), to cover the foreign currency exposure of these senior notes. In 2014, Delhaize Group unwound these cross
currency swap agreements in order to rebalance its long-term debt currency mix. This resulted in a settlement gain of €2 million
and cash inflow of €21 million.
In 2007, Delhaize Group's U.S. operations also entered into cross-currency interest rate swaps, exchanging the principal
amounts (€500 million for $670 million) and interest payments (both variable), in order to cover the foreign currency exposur e of
the entity in connection with the transaction described above. Delhaize Group did not apply hedge accounting to this transaction
because these swaps constitute an economic hedge with Delhaize America, LLC's underlying €500 million term loan. At maturity,
the settlement of this cross-currency interest rate swap did not result in any material impact on profit or loss and generated a
cash inflow of €8 million.
Delhaize Group also enters recurrently into foreign currency swaps with various commercial banks to hedge foreign currency risk
on intercompany loans denominated in currencies other than its reporting currency.
The table below indicates the principal terms of the currency swaps outstanding at December 31, 2014. Changes in fair value of
these swaps are recorded in "Finance costs" in the income statement:
(in millions) Foreign Currency Swaps
Year Trade
Date
Year
Expiration
Date
Amount
Received
from Bank at
Trade Date,
and to be
Delivered to
Bank at
Expiration
Date
Interest Rate
Amount
Delivered to
Bank at
Trade Date,
and to
Receive from
Bank at
Expiration
Date
Interest Rate
Fair Value
Dec. 31,
2014
Fair Value
Dec. 31,
2013
Fair Value
Dec. 31,
2012
2014
2024
$300
4.38%
€220
2.87%
(26)
2014
2015
€4
12m EURIBOR
+3.87%
$5
12m LIBOR
+3.85%
1
2013
2014
€18
12m EURIBOR
+3.79%
$24
12m LIBOR
+3.85%
(1)
2012
2019(1)
€225
3m EURIBOR
+2.06%
$300
3m LIBOR
+2.31%
(7)
1
2012
2013
€30
12m EURIBOR
+3.77%
$40
12m LIBOR
+3.85%
2012
2013
€1
12m EURIBOR
+4.30%
$1
12m LIBOR
+4.94%
2009
2014(2)
€76
6.60%
$100
5.88%
(4)
3m LIBOR ^nn 3m EURIBOR
$670 +0.98% €500 +0.94% 14 (6)
(1) Early unwinding in 2014.
(2) As of December 31, 2012, $100 million/€76 million remained outstanding from the $300 million/€228 million currency swap. Following the redemption on the $300
million senior notes due 2014, the remaining outstanding amount of this swap was unwound and settled on January 3, 2013.
The Group reduces its credit and liquidity risk in connection with derivative financial instruments by entering into ISDA master
agreements, the impact of these agreements is disclosed in Note 10.2.
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.
At December 31, 2014, Delhaize Group had signed a foreign exchange forward contract to purchase in 2015 $12 million in
exchange for €9 million to offset intercompany foreign currency exchange exposure.
As explained in Note 2.3, changes in the fair value of forward contracts are recorded in the income statement in "Finance costs"
or "Income from investments," depending on the underlying transaction.
