Albertsons 2002 Annual Report Download - page 29

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Notes Receivable
Notes receivable arise from financing activities with affiliated retail food cus-
tomers. Loans to affiliated retailers, as well as trade accounts receivable,
are primarily collateralized by the retailers’ inventory, equipment and fix-
tures. The notes range in length from 1 to 20 years with an average term of
7 years, and may be non-interest bearing or bear interest at rates ranging
from 5 to 11 percent.
Included in current receivables are notes receivable due within one year,
net of allowance for losses, of $23.9 and $25.1 million at February 23, 2002
and February 24, 2001, respectively
Debt
February 23, February 24,
(in thousands) 2002 2001
7.8% promissory note due fiscal 2003 $ 300,000 $ 300,000
7.625% promissory note due fiscal 2005 250,000 250,000
7.875% promissory note due fiscal 2010 350,000 350,000
8.875% promissory note due fiscal 2023 100,000 100,000
9.75% senior notes, $168,850 face amount
due fiscal 2005 174,098 178,111
6.23% – 6.69% medium-term notes
due fiscal 2006 – 2007 103,500 103,500
Zero-coupon convertible debentures 216,345 —
Variable rate to 7.125% industrial revenue bonds 71,530 74,526
8.28% – 9.96% promissory notes
due fiscal 2004 – 2010 32,420 37,648
7.78%, 8.02%, and 8.57% obligations with
quarterly payments of principal and interest
due fiscal 2005 through 2007 59,845 60,000
Other debt 10,956 13,762
1,668,694 1,467,547
Less current maturities 326,266 23,171
Long-term debt $1,342,428 $1,444,376
Aggregate maturities of long-term debt during the next five fiscal
years are:
(In thousands)
2003 $326,266
2004 31,857
2005 440,297
2006 62,826
2007 73,112
The debt agreements contain various financial covenants including max-
imum permitted leverage, minimum coverage and asset coverage ratios as
defined in the Company’s debt agreements. The Company has met the
financial covenants under the debt agreements as of February 23, 2002.
On February 28, 2000, the Company exercised its option to prepay
$88.5 million of variable rate debt. Also during fiscal year 2001, $57.5 million
in medium term notes matured. On December 26, 2000 and February 23,
2001, the Company issued $40 million and $20 million of five year debt with
quarterly payments of principal and interest at 7.78% and 8.02%, respec-
tively. On May 30, 2001, the Company issued $10 million of five-year debt
with quarterly payments of principal and interest at 8.57%. The proceeds
from these issuances were used to reduce other short-term debt.
On August 16, 2001, the Company entered into an accounts receivable
securitization program, under which the Company can borrow up to $200
million on a revolving basis, with borrowings secured by eligible accounts
receivable. As of February 23, 2002, the Company had no borrowings
outstanding under this program.
In November 2001, the Company sold zero-coupon convertible deben-
tures having an aggregate principal amount at maturity of $811 million. The
proceeds from the offering, net of approximately $5 million of expenses,
were $208 million. The debentures mature in 30 years and are callable at
the Company’s option on or after October 1, 2006. Holders may require
the Company to purchase all or a portion of their debentures on October 1,
2003, October 1, 2006, or October 1, 2011 at a purchase price equal to
the accreted value of the debentures, which includes accrued and unpaid
cash interest. The debentures will generally be convertible if the closing
price of the Company’s common stock on the New York Stock Exchange
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. The Company may pay contingent cash
interest for the six-month period commencing November 3, 2006 and for
any six-month period thereafter if the average market price of the deben-
tures for a five trading day measurement period preceding the applicable
six-month period equals 120% or more of the sum of the issue price and
accrued original issue discount for the debentures.
The Company has periodically entered into short-term credit agree-
ments having tenors of three to nine months. The Company had $215 mil-
lion in credit facilities under such agreements with rates tied to LIBOR plus
0.310 to 0.515 percent at February 24, 2001. There were no borrowings
outstanding under these credit facilities at February 24, 2001. As of
February 23, 2002 and February 24, 2001, total commercial paper out-
standing was $0 and $327 million, respectively, with a weighted average
interest rate of 6.4 percent at February 24, 2001.