Albertsons 2006 Annual Report Download - page 25

plan, be reflected. Based on both performance of the pension plan assets and plan assumption changes, the
company’s accumulated other comprehensive loss for minimum pension liability is $128.2 million after-tax as of
February 25, 2006. This accumulated other comprehensive loss for minimum pension liability will be revised in
future years depending upon market performance and interest rate levels.
Annual cash dividends declared for fiscal 2006, 2005 and 2004, were $0.64, $0.6025 and $0.5775 per
common share, respectively. The company’s dividend policy will continue to emphasize a high level of earnings
retention for growth.
SUBSEQUENT EVENTS
On March 13, 2006, the pre-merger waiting period for the Proposed Transaction with Albertson’s, Inc.
expired, indicating that the Federal Trade Commission (“FTC”) has completed the pre-merger review as required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. No divestiture of retail stores or other assets
was required and the FTC imposed no conditions or restrictions on the Proposed Transaction. On April 28, 2006,
the SEC declared effective the Form S-4 Joint Proxy Statement / Prospectus in connection with the Proposed
Transaction. The merger will be presented for SUPERVALU shareholder approval at a Special Meeting of
Stockholders, which is scheduled for May 30, 2006, at which SUPERVALU shareholders who held shares as of
the record date of April 21, 2006 will be entitled to vote. The Proposed Transaction also remains subject to the
satisfaction of customary closing conditions, including approval of the Proposed Transaction by Albertsons’
stockholders.
On April 13, 2006, the rating of the long-term unsecured debt of the company by Moody’s Investors Service
was changed from Baa3 to Ba3. As a result of this rating downgrade, the company’s zero-coupon convertible
debentures are now convertible into shares of the company’s common stock. Also as a result of this rating
downgrade, the company amended its annual accounts receivable securitization program on April 24, 2006 to
allow that the rating assigned to the company’s long-term unsecured debt by Standard & Poor’s rating service or
Moody’s rating service to be B+ or higher or B1 or higher, respectively. The amendment resulted in an increase
to the facility fees from 0.375 to 0.55 percent on the total amount of the facility. There were no borrowings
outstanding on this facility as of April 13, 2006.
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 25, 2006. These guarantees were generally made to support the business growth of affiliated
retailers. The guarantees are generally for the entire term of the lease or other debt obligation with remaining
terms that range from less than one year to nineteen years, with a weighted average remaining term of
approximately thirteen years. 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 25, 2006, the maximum
amount of undiscounted payments the company would be required to make in the event of default of all
guarantees was approximately $226 million and represented approximately $126 million on a discounted basis.
No amount has been accrued for the company’s obligation under its guaranty arrangements.
The company is contingently liable for leases that have been assigned to various third parties in connection
with facility closings and dispositions. The company could be required to satisfy the obligations under the leases
if any of the assignees are unable to fulfill their lease obligations. Due to the wide distribution of the company’s
assignments among third parties, and various other remedies available, the company believes the likelihood that
it will be required to assume a material amount of these obligations is remote.
The company is party to a synthetic leasing program for one of its major warehouses. The lease expires in
April 2008, may be renewed with the lessor’s consent through April 2013, and has a purchase option of $60.0
million. At February 25, 2006, the estimated market value of the property underlying this lease approximately
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