There were 101 555 281, 100 870 626 and 100 583 284 Delhaize Group ordinary shares issued and fully paid at December 31, 2010, 2009 and 2008, respectively (par value of EUR 0.50), of which 988 860, 955 586 and 914 716 ordinary shares were held in treasury at December 31, 2010, 2009 and 2008, respectively. Delhaize Group’s ordinary shares may be in either dematerialized, bearer or registered form, within the limits provided for by applicable law. Each shareholder is entitled to one vote for each ordinary share held on each matter submitted to a vote of shareholders.
In the event of a liquidation, dissolution or winding up of Delhaize Group, holders of Delhaize Group ordinary shares are entitled to receive, on a pro-rata basis, any proceeds from the sale of Delhaize Group’s remaining assets available for distribution. Under Belgian law, the approval of holders of Delhaize Group ordinary shares is required for any future capital increases. Existing shareholders are entitled to preferential sub- scription rights to subscribe to a pro-rata portion of any such future capital increases of Delhaize Group, subject to certain limitations.
authorized Capital
As authorized by the Extraordinary General Meeting held on May 24, 2007, the Board of Directors of Delhaize Group may, for a period of five years expiring in June 2012, within certain legal limits, increase the capital of Delhaize Group or issue convertible bonds or subscription rights which might result in an increase of capital by a maximum of EUR 9.7 million corresponding to approximately 19.4 million shares. The author- ized increase in capital may be achieved by contributions in cash or, to the extent permitted by law, by contributions in kind or by incorporation of available or unavailable reserves or of the share premium account. The Board of Directors of Delhaize Group may, for this increase in capital, limit or remove the preferential subscription rights of Delhaize Group’s shareholders, within certain legal limits.
PERSONS AUDITOR OF DELHAIZE GROUP SA STATEMENT OF COMPREHENSIVE INCOME OF CHANGES IN EqUITY OF CASH FLOwS statements
In 2010, Delhaize Group issued 684 655 shares of common stock (2009: 287 342; 2008: 302 777) for EUR 26 million (2009: EUR 14 million; 2008: EUR 15 million), net of EUR 13 million (2009: EUR 5 million; 2008: EUR 6 million) representing the portion of the subscription price funded
by Delhaize America in the name and for the account of the optionees and net of issue costs.
Recent Capital Increases (in EUR, except number of shares) Capital Share Premium Number of Shares
Account(1)
Capital on January 1, 2008 50 140 253 2 709 442 063 100 280 507
Capital increase as a consequence of the exercise
of warrants under the 2002 Stock Incentive Plan 151 389 15 101 524 302 777
Capital on December 31, 2008 50 291 642 2 724 543 587 100 583 284
Capital increase as a consequence of the exercise
of warrants under the 2002 Stock Incentive Plan 143 671 14 476 965 287 342
Capital on December 31, 2009 50 435 313 2 739 020 552 100 870 626
Capital increase as a consequence of the exercise
of warrants under the 2002 Stock Incentive Plan 342 328 38 587 734 684 655
Capital on December 31, 2010 50 777 641 2 777 608 286 101 555 281
(1) Share premium as recorded in the non-consolidated accounts of Delhaize Group SA, prepared under Belgian GAAP.
Authorized Capital - Status (in EUR, except number of shares) Maximum Maximum Amount
Number of Shares (excluding Share
Premium)
Authorized capital as approved at the May 24, 2007 General Meeting with effect as of June 18, 2007 19 357 794 9 678 897 May 30, 2008 - Issuance of warrants under the Delhaize Group 2002 Stock Incentive Plan (528 542) (264 271)
Balance of remaining authorized capital as of December 31, 2008 18 829 252 9 414 626
June 9, 2009 - Issuance of warrants under the Delhaize Group 2002 Stock Incentive Plan (301 882) (150 941)
Balance of remaining authorized capital as of December 31, 2009 18 527 370 9 263 685
June 8, 2010 - Issuance of warrants under the Delhaize Group 2002 Stock Incentive Plan (232 992) (116 496)
Balance of remaining authorized capital as of December 31, 2010 18 294 378 9 147 189
share repurchases
On May 28, 2009, at an Extraordinary General Meeting, the Delhaize Group’s shareholders authorized the Board of Directors, in the ordinary course of business, to acquire up to 10% of the outstanding shares of the Group at a minimum share price of EUR 1.00 and a maximum share price not higher than 20% above the highest closing price of the Delhaize Group share on NYSE Euronext Brussels during the 20 trading days preceding the acquisition. This authorization, which has been granted for two years, replaces the one granted in May 2008. Such authorization also relates to the acquisition of shares of Delhaize Group by one or several direct subsidiaries of the Group, as defined by legal provisions on acquisition of shares of the Group by subsidiaries.
In May 2004, the Board of Directors approved the repurchase of up to EUR 200 million of the Group’s shares or ADRs from time to time in the open market, in compliance with applicable law and subject to and within the limits of an outstanding authorization granted to the Board by the shareholders, to satisfy exercises under the stock option plans that Delhaize Group offers to its associates. No time limit has been set for these repurchases.
During 2010, Delhaize Group SA acquired 311 996 Delhaize Group shares for an aggregate amount of EUR 19 million, representing approxi- mately 0.3% of Delhaize Group’s share capital and transferred 251 782 shares to satisfy the exercise of stock options granted to associates of non-U.S. operating companies (see Note 21.3).
Additionally, Delhaize America, LLC repurchased in 2010, 130 000 Delhaize Group ADRs for an aggregate amount of USD 9 million, representing approximately 0.1% of the Delhaize Group share capital as at December 31, 2010 and transferred 156 940 ADRs to satisfy the exercise of stock options granted to U.S. management pursuant to the Delhaize America 2000 Stock Incentive Plan and the Delhaize America 2002 Restricted Stock Unit Plan.
As a consequence, at the end of 2010, the management of Delhaize Group SA had a remaining authorization for the purchase of its own shares or ADRs for an amount up to EUR 62 million subject to and within the limits of an outstanding authorization granted to the Board of Directors by the shareholders.
At the end of 2010, Delhaize Group owned 988 860 treasury shares (including ADRs), of which 546 864 were acquired prior to 2010, represent- ing approximately 0.97% of the Delhaize Group share capital.
Delhaize Group SA provided a Belgian financial institution with a discretionary mandate to purchase up to 500 000 Delhaize Group ordinary shares on NYSE Euronext Brussels between March 10, 2008 and March 9, 2010 to satisfy exercises of stock options held by management of its non-US operating companies. This mandate was renewed on March 15, 2010 and allows the institution to purchase up to 1 100 000 Delhaize Group ordinary shares on NYSE Euronext Brussels until December 31, 2013. This credit institution makes its decisions to purchase Delhaize Group ordinary shares pursuant to the guidelines set forth in the discretionary mandate, independent of further instructions from Delhaize Group SA, and without its influence with regard to the timing of the purchases. The financial institution is able to purchase shares only when the number of Delhaize Group ordinary shares held by a custodian bank falls below a certain minimum threshold contained in the discretionary mandate.
CONSOLIDATED BALANCE SHEET CONSOLIDATED INCOME
STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF CHANGES IN EqUITY CONSOLIDATED STATEMENT OF CASH FLOwS notes to the finanCial statements
In August 2010, Delhaize America, LLC engaged a U.S.-based financial institution to purchase on its behalf Delhaize Group ADRs on the New York Stock Exchange. This engagement was established to assist in the satisfaction of certain restricted stock unit awards provided to U.S.-based executive employees. The financial institution made its decisions to purchase ADRs under this agreement pursuant to the guidelines set forth in a related share repurchase plan, independent of further instruction from Delhaize America, LLC. The financial institution completed the purchases allowed under the plan in December 2010, purchasing a total of 130 000 ADRs.
retained earnings
Retained earnings increased in 2010 by EUR 382 million, representing the profit attributable to owners of the parent (EUR 574 million) net of the dividend declared in 2010 of EUR 161 million and the purchase of non-controlling interests in Alfa Beta of EUR 31 million (see Note 4.2). According to Belgian law, 5% of the statutory net income of the parent company must be transferred each year to a legal reserve until the legal reserve reaches 10% of the capital. At December 31, 2010, 2009 and 2008, Delhaize Group’s legal reserve amounted to EUR 5 million and was recorded in retained earnings. Generally, this reserve cannot be distributed to the shareholders other than upon liquidation.
The Board of Directors may propose a dividend distribution to shareholders up to the amount of the distributable reserves of Delhaize Group SA, including the profit of the last fiscal year, subject to the debt covenants (see Note 18.2). The shareholders at Delhaize Group’s Ordinary General Meeting must approve such dividends.
other reserves
(in millions of EUR) December 31,
2010 2009 2008
Deferred gain (loss) on discontinued cash flow hedges:
Gross (15) (15) (16)
Tax effect 6 6 6
Cash flow hedge:
Gross (1) (9) -
Tax effect - 3 -
Actuarial gain (loss) on defined benefit plans:
Gross (44) (43) (35)
Tax effect 16 16 13
Unrealized gain (loss) on securities available-for-sale:
Gross 5 3 9
Tax effect (1) (1) (2)
Total other reserves (34) (40) (25)
• Deferred gain (loss) on discontinued cash flow hedge: This represents a deferred loss on the settlement of a hedge agreement in 2001 related
to securing financing for the Hannaford acquisition by Delhaize America, and a deferred gain related to the 2007 debt refinancing (see Note 18.1). Both deferred loss and deferred gain are being amortized over the life of the underlying debt instruments.
• Cash flow hedge: This reserve contains the effective portion of the cumulative net change in the fair value of cash flow hedge instruments
related to hedged transactions that have not yet occurred (see Note 19). No “basis adjustments” took place during 2010.
• Actuarial gain (loss) on defined benefit plans: Delhaize Group elected to recognize actuarial gains and losses, which represent adjustments
to the defined benefit net liabilities due to experience and changes in actuarial assumptions, fully in the period in which they occur in OCI (see Note 21.1). Actuarial gains and losses are never reclassified into profit or loss.
• Unrealized gain (loss) on securities available for sale: The Group recognizes in this reserve fair value changes on financial assets classified
as available-for-sale.
Cumulative translation adjustment
The cumulative translation adjustment relates to changes in the balance of assets and liabilities due to changes in the functional currency of the Group’s subsidiaries relative to the Group’s reporting currency. The balance in cumulative translation adjustment is mainly impacted by the appreciation or depreciation of the U.S. dollar to the euro.
PERSONS AUDITOR OF DELHAIZE GROUP SA STATEMENT OF COMPREHENSIVE INCOME OF CHANGES IN EqUITY OF CASH FLOwS statements
Capital management
Delhaize Group’s objectives for managing capital are to safeguard the Group’s ability to continue as a going concern and to maximize share- holder value, while maintaining investment grade, keeping sufficient flexibility to execute strategic projects and reduce cost of capital. In order to maintain or adjust the capital structure and optimize the cost of capital, the Group may, besides others, return capital to sharehold- ers, issue new shares and / or debt or refinance / exchange existing debt. Further, Delhaize Group’s dividend policy aims at paying out a regularly increasing dividend while retaining free cash flow at an amount consistent with the opportunities to finance the future growth of the Group and maintaining the finance structure in accordance with the objectives stated above.
Consistent with the objectives noted, the Group monitors its capital structure, by using (i) the equity vs liability classifications as applied in its consolidated financial statements, (ii) debt capacity, (iii) its net debt and (iv) “Net-debt-to-equity” ratio (see Note 18.4).
During 2010, the capital and share premium of Delhaize Group increased by EUR 26 million.
non-controlling interests
Non-controlling interests represent third-party interests in the equity of fully consolidated companies that are not wholly owned by Delhaize Group.
Non-controlling interests (in millions of EUR) December 31,
Note 2010 2009 2008
Belgium 1 1 1
Greece 4.2 - 16 51
Total 1 17 52
As mentioned in Note 4.2, Delhaize Group acquired the remaining non-controlling interests in Alfa Beta during 2010.