Albertsons 2009 Annual Report Download - page 37

All obligations under the senior secured credit facilities are guaranteed by each material subsidiary of the
Company. The obligations are also secured by a pledge of the equity interests in those same material
subsidiaries, limited as required by the existing public indentures of the Company and subsidiaries such that
the respective debt issued need not be equally and ratably secured.
The senior secured credit facilities also contain various financial covenants, including a minimum interest
expense coverage ratio and a maximum debt leverage ratio. The interest expense coverage ratio shall not be
less than 2.25 to 1 for each of the fiscal quarters ending up through December 30, 2009, and moves
progressively to a ratio of not less than 2.30 to 1 for the fiscal quarters ending after December 30, 2009. The
debt leverage ratio shall not exceed 4.00 to 1 for each of the fiscal quarters ending up through December 30,
2009 and moves progressively to a ratio not to exceed 3.75 to 1 for each of the fiscal quarters ending after
December 30, 2009. As of February 28, 2009, the Company was in compliance with the covenants of the
senior secured credit facilities.
Borrowings under Term Loan A and Term Loan B may be repaid, in full or in part, at any time without
penalty. Term Loan A has required repayments, payable quarterly, equal to 2.50 percent of the initial drawn
balance for the first four quarterly payments (year one) and 3.75 percent of the initial drawn balance for each
quarterly payment in years two through five, with the entire remaining balance due at the five year anniversary
of the inception date. Term Loan B has required repayments, payable quarterly, equal to 0.25 percent of the
initial drawn balance, with the entire remaining balance due at the six year anniversary of the inception date.
Prepayments shall be applied pro rata to the remaining amortization payments.
As of February 28, 2009, there were $298 of outstanding borrowings under the Revolving Credit Facility,
Term Loan A had a remaining principal balance of $506, of which $113 was classified as current, and Term
Loan B had a remaining principal balance of $1,116, of which $11 was classified as current. Letters of credit
outstanding under the Revolving Credit Facility were $345 and the unused available credit under the Revolving
Credit Facility was $1,357. The Company also had $2 of outstanding letters of credit issued under separate
agreements with financial institutions. These letters of credit primarily support workers’ compensation,
merchandise import programs and payment obligations. The Company pays fees, which vary by instrument, of
up to 1.40 percent on the outstanding balance of the letters of credit.
In May 2008, the Company amended and extended its 364-day accounts receivable securitization program.
The Company can continue to borrow up to $300 on a revolving basis, with borrowings secured by eligible
accounts receivable, which remain under the Company’s control. Facility fees under this program range from
0.225 percent to 2.00 percent, based on the Company’s credit ratings. The facility fee in effect on February 28,
2009, based on the Company’s current credit ratings, is 0.25 percent. As of February 28, 2009, there were
$353 of accounts receivable pledged as collateral, classified in Receivables in the Consolidated Balance Sheet.
Due to the Company’s intent to renew the facility or refinance it with the Revolving Credit Facility, the
facility is classified in Long-term debt in the Consolidated Balance Sheets.
As of February 28, 2009, the Company had $701 of debt, in addition to the Accounts Receivable Securitization
Facility, with current maturities that are classified in Long-term debt in the Consolidated Balance Sheets due
to the Company’s intent to refinance such obligations with the Revolving Credit Facility or other long-term
debt.
The Company has $191 of debentures that contain put options exercisable in May 2009 classified as current
that would require the Company to repay borrowed amounts prior to the scheduled maturity in May 2037.
The Company remains in compliance with all of its debt covenants.
Annual cash dividends declared for fiscal 2009, 2008 and 2007, were $0.6875, $0.6750 and $0.6575 per share,
respectively. The Company’s dividend policy will continue to emphasize a high level of earnings retention for growth.
Capital spending for fiscal 2009 was $1,212, including $26 of capital leases. Capital spending primarily
included store remodeling activity, new retail stores and technology expenditures. The Company’s capital
spending for fiscal 2010 is projected to be approximately $750, including capital leases.
Fiscal 2010 debt reduction is estimated to be approximately $700.
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