Albertsons 2006 Annual Report Download - page 70

SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The debt agreements contain various financial covenants including ratios for interest coverage and debt
leverage as defined in the company’s debt agreements. The company has met the financial covenants under the
debt agreements as of February 25, 2006.
At February 25, 2006, the company had an unsecured $750.0 million revolving credit agreement with rates
tied to LIBOR plus 0.275 to 0.675 percent and with facility fees ranging from 0.10 to 0.20 percent on the total
amount of the facility, both based on the company’s credit ratings. The company had no outstanding borrowings
under the credit facility at February 25, 2006 and February 26, 2005. As of February 25, 2006, letters of credit
outstanding under the credit facility were $148.4 million and the unused available credit under the facility was
$601.6 million. The agreement contains various financial covenants including ratios for interest coverage and
debt leverage. The company has met the financial covenants under the revolving credit agreements as of
February 25, 2006.
In August 2005, the company renewed its annual accounts receivable securitization program, under which
the company can borrow up to $200.0 million on a revolving basis, with borrowings secured by eligible accounts
receivable. Facility fees related to the accounts receivable securitization program incurred by the company during
Fiscal 2006 were 0.175 to 0.20 percent on the total amount of the facility. The company had no outstanding
borrowings under this program at February 25, 2006 and February 26, 2005. The agreement contains various
covenants that are consistent with transactions of this nature, including a requirement 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 BB
or higher or Ba2 or higher, respectively. The company has met the covenants under the annual accounts
receivable program as of February 25, 2006. See Subsequent Events note in the Notes to the Consolidated
Financial Statements for additional discussion.
On May 3, 2004, the company voluntarily redeemed $250.0 million of 7.625 percent notes due
September 15, 2004, in accordance with the note redemption provisions. The company incurred $5.7 million in
pre-tax costs related to this early redemption, which is included in interest expense.
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, 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 are 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 $39.75 per share for the quarter ending June 17, 2006, and rising to
$113.29 per share at September 6, 2031, if the rating assigned to the debentures by Standard & Poor’s rating
service or Moody’s rating service, are BB or lower, or Ba3 or lower, respectively, if the notes are called for
redemption, or if certain specified corporate actions occur. In the event of conversion, 9.6434 shares of the
company’s common stock will be issued per $1,000 debenture or approximately 7.8 million shares should all
debentures be converted. The debentures have an initial yield to maturity of 4.5 percent, which is being accreted
over the life of the debentures using the effective interest method. The company will 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 percent 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 intent, subject to the
Proposed Transaction, to settle with equity shares upon conversion.
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