Albertsons 2003 Annual Report Download - page 59

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SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
contains various financial covenants including ratios for fixed charge interest coverage, asset coverage and debt
leverage, in addition to a minimum net worth covenant. This credit facility replaced the company’s
$300.0 million and $400.0 million credit facilities, which had expiration dates in August and October of 2002,
respectively. The company had no outstanding borrowings under the credit facilities at February 22, 2003 and
February 23, 2002. As of February 22, 2003, letters of credit outstanding under the credit facility were
$129.0 million and the unused available credit under the facility was $521.0 million.
In November 2001, the company sold zero-coupon convertible debentures having an aggregate principal
amount at maturity of $811.0 million. The proceeds from the offering, net of approximately $5.0 million of
expenses, were $208.0 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. If the option is exercised, the company has the
choice of paying the holder in cash, common stock or a combination of the two. 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, at $35.07 per share for the quarter ended
June 14, 2003, 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
maturity 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 debentures 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 debentures are classified as long-term debt based on the
company’s ability and intent to refinance the obligation with long-term debt if the company is required to
repurchase the debentures.
LEASES
Capital and operating leases:
The company leases certain retail food stores, food distribution warehouses and office facilities. Many of
these leases include renewal options, and to a limited extent, include options to purchase. Amortization of assets
under capital leases was $32.8 million, $31.6 million and $33.3 million in fiscal 2003, 2002 and 2001,
respectively.
F-24