Albertsons 2003 Annual Report Download - page 21

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Cash dividends declared during fiscal 2003, 2002 and 2001 totaled $0.5675, $0.5575 and $0.5475 per
common share, respectively. The company’s dividend policy will continue to emphasize a high level of earnings
retention for growth.
COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS
The company has guaranteed certain leases, fixture financing loans and other debt obligations of various
retailers at February 22, 2003. These guarantees were made to support the business growth of affiliated retailers.
The guarantees are generally for the entire term of the lease or other debt obligation. For each guarantee issued, if
the affiliated retailer defaults on a payment, the company would be required to make payments under its
guarantee. Generally, the guarantees are secured by indemnification agreements or personal guarantees of the
affiliated retailer. At February 22, 2003, the maximum amount of undiscounted payments the company would be
required to make in the event of default of all guarantees is $305.9 million and represents $200.3 million on a
discounted basis. No amount has been accrued for the company’s obligation under its guaranty arrangements. In
addition, the company has guaranteed construction loans on warehouses of $26.3 million at February 22, 2003
that the company will purchase upon completion. The company did not enter into any new guarantees or modify
existing guarantees after December 31, 2002.
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 $13.4 million at February 22, 2003. At
February 22, 2003, the company’s limited recourse with respect to notes sold was $11.0 million.
The company is party to synthetic leasing programs for two of its major warehouses. The leases expire in
April 2003 and September 2004. As of April 2003, the company has refinanced the lease that is expiring in fiscal
2004 with a new synthetic lease expiring in April 2008 including a purchase option of approximately
$60 million. The lease that expires in September 2004 may be renewed with the lessor’s consent through
September 2006, and has a purchase option of approximately $25 million. At February 22, 2003, the estimated
market value of the properties underlying these leases equaled or exceeded the purchase options.
In July and August 2002, several class action lawsuits were filed against the company and certain of its
officers and directors in the United States District Court for the District of Minnesota on behalf of purchasers of
the company’s securities between July 11, 1999 and June 26, 2002. The lawsuits have been consolidated into a
single action, in which it is alleged that the company and certain of its officers and directors violated Federal
securities laws by issuing materially false and misleading statements relating to its financial performance. The
company believes that the lawsuit is without merit and intends to vigorously defend the action. No damages have
been specified. The company is unable to evaluate the likelihood of prevailing in the case at this stage of the
proceedings.
The company is a party to various other 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.
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