Kroger 2010 Annual Report Download - page 129

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NO T E S T O CO N S O L I D A T E D FI N A N C I A L ST A T E M E N T S , CO N T I N U E D
5. DE B T OB L I G A T I O N S
Long-term debt consists of:
2010 2009
3.90% to 8.05% Senior notes and debentures due through 2040 ...... 7,106 7,308
5.00% to 9.88% Mortgages due in varying amounts through 2034 . . . . 73 105
Other .................................................... 255 163
Total debt ................................................ 7,434 7,576
Less current portion ........................................ (549) (549)
Total long-term debt ........................................ $6,885 $ 7,027
With the proceeds received from the Company’s 2009 issuance of $500 of senior notes bearing an
interest rate of 3.90% due in 2015, the Company repaid $500 of senior notes bearing an interest rate of
8.05% that matured in 2010.
In 2010, the Company issued $300 of senior notes bearing an interest rate of 5.40% due in 2040.
On November 8, 2010, the Company entered into a new $2,000 unsecured revolving credit facility
(the “New Credit Agreement”), with a termination date of May 15, 2014, unless extended as permitted
under the New Credit Agreement. This credit facility replaced the Company’s $2,500 credit facility that
would otherwise have terminated on November 15, 2011. Borrowings under the New Credit Agreement
bear interest at the Company’s option, at either (i) LIBOR plus a market rate spread, subject to a floor and
cap based on the Company’s Leverage Ratio or (ii) the base rate, defined as the highest of (a) the Bank of
America prime rate, (b) the Federal Funds rate plus 0.5%, and (c) one-month LIBOR plus 1.0%, subject to
a floor and cap based on the Company’s Leverage Ratio, minus 1.0% but not less than 0.0%. The Company
will also pay a Commitment Fee based on the Leverage Ratio and Letter of Credit fees equal to a market
rate spread for LIBOR loans. The New Credit Agreement contains covenants, which, among other things,
require the maintenance of a Leverage Ratio of not greater than 3.50:1.00 and a Fixed Charge Coverage
Ratio of not less than 1.70:1.00. The Company may repay the New Credit Agreement in whole or in part
at any time without premium or penalty. The New Credit Agreement is not guaranteed by the Company’s
subsidiaries. As a result, the Company terminated the subsidiary guarantees of its outstanding public debt
in accordance with the provisions of the indentures for that debt.
In addition to the credit agreement, the Company maintained three uncommitted money market
lines totaling $100 in the aggregate. The money market lines allow the Company to borrow from banks
at mutually agreed upon rates, usually at rates below the rates offered under the credit agreement. As of
January 29, 2011, the Company had no borrowings under its credit agreement, money market lines or
outstanding commercial paper.
As of January 29, 2011, the Company had outstanding letters of credit in the amount of $305, of which
$134 reduce funds available under the Company’s credit agreement. The letters of credit are maintained
primarily to support performance, payment, deposit or surety obligations of the Company.
Most of the Company’s outstanding public debt is subject to early redemption at varying times and
premiums, at the option of the Company. In addition, subject to certain conditions, some of the Company’s
publicly issued debt will be subject to redemption, in whole or in part, at the option of the holder upon the
occurrence of a redemption event, upon not less than five days’ notice prior to the date of redemption, at a