Albertsons 2002 Annual Report Download - page 18

for twenty of the last thirty trading days of any fiscal quarter exceeds certain
levels, set initially at $33.20 per share for the quarter ended February 23,
2002, and rising to $113.29 per share at September 6, 2031. In the event
of conversion, 9.6434 shares of the Company’s common stock will be
issued per $1,000 debenture. The debentures have an initial yield to matu-
rity of 4.5%, which is being accreted over the life of the debentures using
the effective interest method.
SUPERVALU’s capital budget for fiscal 2003, which includes capitalized
leases, is projected at approximately $500 to $525 million, compared with
actual spending of $388.7 million in fiscal 2002. The capital budget for 2003
anticipates cash spending of $420 to $445 million, in addition to $80 million
budgeted for capital leases. Approximately $340 million of the fiscal 2003
budget has been identified for use in the Company’s retail food business.
The budget provides for approximately 10 to 15 new price superstores
and approximately 150 to 170 new extreme value stores including the
announced acquisition of 45 extreme value general merchandise stores.
The balance of the fiscal 2003 capital budget relates to distribution mainte-
nance capital and information technology related items. In addition, the
Company will continue to support store development and financing for the
Company’s independent retailers. Certain retailer financing activities do not
require new cash outlays because they are leases or guarantees. The capi-
tal budget does include amounts for projects which are subject to change
and for which firm commitments have not been made.
Cash dividends declared during fiscal 2002, 2001 and 2000 totaled
$0.5575 cents, $0.5475 cents, and $0.5375 cents per common share,
respectively. The Company’s dividend policy will continue to emphasize a
high level of earnings retention for growth.
The following table represents the Company’s total commitments and total off-balance sheet arrangements at February 23, 2002.
Amount of Commitment Expiration Per Period
(In thousands) Total Amount Committed Fiscal 2003 Fiscal 2004-2005 Fiscal 2006-2007 Thereafter
Commitments:
Notes Payable $ 27,465 $ 27,465 $ — $ — $ —
Debt 1,668,694 326,266 472,154 135,938 734,336
Capital and Deferred Financing Leases 563,587 30,142 82,919 79,838 370,688
Total Commitments $2,259,746 $383,873 $555,073 $215,776 $1,105,024
Off-Balance Sheet Arrangements:
Retailer Loan and Lease Guarantees $ 215,200 $ 39,200 $ 54,500 $ 36,600 $ 84,900
Limited Recourse Liability on Notes Receivable 12,100 2,000 4,300 3,600 2,200
Purchase Options on Synthetic Leases 85,000 —85,000 ——
Operating Leases 996,728 136,826 228,364 173,869 457,669
Total Off-Balance Sheet Arrangements $1,309,028 $178,026 $372,164 $214,069 $ 544,769
Commitments, Contingencies and Off-Balance Sheet
Arrangements
The Company has guaranteed mortgage loan and other debt obligations
of $6.7 million. The Company has also guaranteed the leases and fixture
financing loans of various retailers with a present value of $174.8 million
and $33.7 million, respectively.
On December 4, 1998, the Company entered into an agreement to
sell notes receivable to a special purpose entity, which qualifies to be
accounted for as an unconsolidated subsidiary. The entity is designed to
acquire qualifying notes receivable from the Company and sell them to a
third party. No notes have been sold since February 29, 2000. Assets and
related debt off-balance sheet were $27.0 million at February 23, 2002 and
$46.4 million at February 24, 2001. At February 23, 2002, the Company’s
limited recourse with respect to notes sold was $12.1 million.
The Company is party to synthetic leasing programs for two of its major
warehouses. The leases expire in fiscal 2004 and fiscal 2005 and may be
renewed with the lessor’s consent through fiscal 2009 and fiscal 2007, and
have purchase options of $60 million and $25 million, respectively. At
February 23, 2003, the estimated market value of the properties underlying
these leases equaled or exceeded the purchase options. See further dis-
closure in the Company’s footnote on Commitments, Contingencies and
Off-Balance Sheet Arrangements.
The Company is a party to various legal proceedings arising from
the normal course of business activities, none of which, in management’s
opinion, is expected to have a material adverse impact on the Company’s
consolidated statement of earnings or consolidated financial position.
16