Albertsons 2011 Annual Report Download - page 33

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December 30, 2011, 4.0 to 1.0 from December 31, 2011 through December 30, 2012 and 3.75 to 1.0
thereafter. The Company’s leverage ratio was 3.5 to 1.0 at February 26, 2011. Additionally, the Company must
maintain an interest expense coverage ratio of not less than 2.20 to 1.0 through December 30, 2011, 2.25 to
1.0 from December 31, 2011 through December 30, 2012 and 2.30 to 1.0 thereafter. The Company’s interest
expense ratio was 2.6 to 1.0 at February 26, 2011.
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, such that the respective
debt issued need not be equally and ratably secured.
In May 2010, the Company amended and extended its accounts receivable securitization program until May
2013. The Company can borrow up to $200 on a revolving basis, with borrowings secured by eligible accounts
receivable, which remain under the Company’s control. The facility fee in effect on February 26, 2011, based
on the Company’s current credit ratings, was 1.00 percent.
As of February 26, 2011, the Company had $30 of debt 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.
On April 6, 2011, the Company announced that it is seeking the consent of lenders to amend its existing
senior secured credit facilities to allow for the extension of Term Loan B-1 due in June 2012 to April 2018.
The Company expects to complete the amendment in late April 2011.
Annual cash dividends declared for fiscal 2011, 2010 and 2009, were $0.3500, $0.6100 and $0.6875 per share,
respectively. The Company’s dividend policy will continue to emphasize a high level of earnings retention for
growth.
Capital spending for fiscal 2011 was $604, including $7 of capital leases. Capital spending primarily included
store remodeling activity, new retail stores and technology expenditures. The Company’s capital spending for
fiscal 2012 is projected to be approximately $700 to $750, including capital leases.
Fiscal 2012 total debt reduction is estimated to be approximately $500 to $550.
OFF-BALANCE SHEET ARRANGEMENTS
Guarantees
The Company has guaranteed certain leases, fixture financing loans and other debt obligations of various retailers
as of February 26, 2011. These guarantees were generally made to support the business growth of independent
retail customers. The guarantees are generally for the entire terms of the leases or other debt obligations with
remaining terms that range from less than one year to 19 years, with a weighted average remaining term of
approximately eight years. For each guarantee issued, if the independent retail customer 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 independent retail customer. The Company reviews
performance risk related to its guarantees of independent retail customers based on internal measures of credit
performance. As of February 26, 2011, the maximum amount of undiscounted payments the Company would be
required to make in the event of default of all guarantees was approximately $116 and represented approximately
$86 on a discounted basis. Based on the indemnification agreements, personal guarantees and results of the
reviews of performance risk, the Company believes the likelihood that it will be required to assume a material
amount of these obligations is remote. Accordingly, no amount has been recorded in the Consolidated Balance
Sheets for these contingent obligations under the Company’s guarantee 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.
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