Albertsons 2007 Annual Report Download - page 37

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Upon settlement of the purchase contracts on May 16, 2007, the Company will receive approximately
$
45 of net
cas
h
an
di
ssue 1.2 s
h
ares, w
hi
c
h
t
h
e Company
i
nten
d
s to repurc
h
ase t
h
roug
hi
ts s
h
are repurc
h
ase program.
T
he Company is party to a synthetic leasing program for one of its major warehouses. The lease expires in April
2008 and it may be renewed with the lessor’s consent through April 2013, and has a purchase option of
$
60. On
Februar
y
8, 2007, the Compan
y
approved a plan to exit this facilit
y
. As a result of the decision to exit this
f
acility, the Company has recorded the difference between the purchase option and the estimated market value o
f
t
h
e property un
d
er
l
y
i
ng t
h
e
l
ease as a res
id
ua
l
va
l
ue guarantee. T
h
e res
id
ua
l
va
l
ue guarantee
i
s
i
nc
l
u
d
e
di
nOt
h
e
r
current assets on the Compan
y
’s Consolidated Balance Sheet as of Februar
y
24, 2007 and will be amortized ove
r
the remaining term of the lease.
Medium-term notes of $30 due Jul
y
2027 contain put options that would require the Compan
y
to repa
y
the note
s
in July 2007 if the holders of the notes so elect by giving the Company 30-days notice. Medium-term notes of
$
49 due April 2028 contain put options that would require the Company to repay the notes in April 2008 if th
e
h
olders of the notes so elect b
yg
ivin
g
the Compan
y
30-da
y
s notice. The $209 of 7.5 percent debentures due Ma
y
2037 contain put options that would require the Company to repay the notes in May 2009 if the holders of the
notes so e
l
ect
b
yg
i
v
i
ng t
h
e Company 30-
d
ays not
i
ce
.
Annual cash dividends declared for fiscal 2007, 2006 and 2005, were
$
0.6575,
$
0.6400 and
$
0.6025
p
er common
s
h
are, respect
i
ve
l
y. T
h
e Company’s
di
v
id
en
d
po
li
cy w
ill
cont
i
nue to emp
h
as
i
ze a
hi
g
hl
eve
l
o
f
earn
i
ngs retent
i
o
n
f
or
g
rowth
.
C
apital spending for fiscal 2007 was
$
927, including
$
73 of capital leases. Capital spending primarily included
retail store expansion and store remodelin
g
. The Compan
y
’s capital spendin
g
for fiscal 2008 is pro
j
ected to be
a
pproximately
$
1,200, including capital leases.
S
UB
S
E
Q
UENT EVENT
S
On Marc
h
8, 2007, t
h
e Company execute
d
an amen
d
ment to t
h
eex
i
st
i
ng cre
di
t
f
ac
ili
ty, resu
l
t
i
ng
i
nne
w
a
pplicable interest rates for two of its term loans. Rates on Term Loan A and Term Loan B were chan
g
ed to
LIBOR plus 0.37
5
percent to 1.
5
0 percent and LIBOR plus 1.2
5
percent to 1.7
5
percent, respectively, depending
o
nt
h
e Company’s cre
di
t rat
i
ngs. T
hi
s amen
d
ment resu
l
te
di
nt
h
e rates on t
h
e outstan
di
ng Term Loan A an
d
Ter
m
Loan B balances chan
g
in
g
to LIBOR plus 1.37
5
percent and LIBOR plus 1.
5
0 percent, respectivel
y
.
On Apr
il
18, 2007, t
h
e Company’s Boar
d
o
f
D
i
rectors a
d
opte
d
a new s
h
are repurc
h
ase program aut
h
or
i
z
i
ng t
h
e
C
ompan
y
to purchase up to $235 of the Compan
y
’s common stock. Share repurchases will be made with the cash
g
enerated from the exercise of stock options and mandatory convertible securities equity issuance. This progra
m
rep
l
aces a
ll
prev
i
ous
l
yex
i
st
i
ng programs
.
On April 18, 2007, the Company cancelled its interest rate swap agreements.
COMMITMENT
S
, CONTINGENCIE
S
AND OFF-BALANCE
S
HEET ARRANGEMENT
S
Th
e Company
h
as guarantee
d
certa
i
n
l
eases,
fi
xture
fi
nanc
i
ng
l
oans an
d
ot
h
er
d
e
b
to
bli
gat
i
ons o
f
var
i
ous reta
il
er
s
a
t Februar
y
24, 2007. These
g
uarantees were
g
enerall
y
made to support the business
g
rowth of affiliated retailers
.
T
he guarantees are generally for the entire terms of the leases or other debt obligations with remaining terms that
range
f
rom
l
ess t
h
an one year to 20 years, w
i
t
h
awe
i
g
h
te
d
average rema
i
n
i
ng term o
f
approx
i
mate
l
y 12 years.
For each
g
uarantee issued, if the affiliated retailer defaults on a pa
y
ment, the Compan
y
would be required t
o
make payments under its guarantee. Generally, the guarantees are secured by indemnification agreements o
r
persona
l
guarantees o
f
t
h
ea
ffili
ate
d
reta
il
er. At Fe
b
ruary 24, 2007, t
h
e max
i
mum amount o
f
un
di
scounte
d
pa
y
ments the Compan
y
would be required to make in the event of default of all
g
uarantees was approximatel
y
$
215 and represented approximately
$
141 on a discounted basis. No amount has been recorded in th
e
31