Safeway 2010 Annual Report Download - page 63

SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note D: Financing
Notes and debentures were composed of the following at year end (in millions):
2010 2009
Commercial paper $–$ 50.0
Bank credit agreement, unsecured ––
Other bank borrowings, unsecured 2.4 2.1
Mortgage notes payable, secured 11.3 14.9
4.95% Senior Notes due 2010, unsecured –500.0
6.50% Senior Notes due 2011, unsecured 500.0 500.0
5.80% Senior Notes due 2012, unsecured 800.0 800.0
6.25% Senior Notes due 2014, unsecured 500.0 500.0
5.625% Senior Notes due 2014, unsecured 250.0 250.0
6.35% Senior Notes due 2017, unsecured 500.0 500.0
5.00% Senior Notes due 2019, unsecured 500.0 500.0
3.95% Senior Notes due 2020, unsecured 500.0 –
7.45% Senior Debentures due 2027, unsecured 150.0 150.0
7.25% Senior Debentures due 2031, unsecured 600.0 600.0
Other notes payable, unsecured 24.1 22.1
Interest rate swap fair value adjustment 11.6 (6.6)
Unamortized deferred gain on swap termination – 1.0
4,349.4 4,383.5
Less current maturities (505.6) (509.2)
Long-term portion $ 3,843.8 $ 3,874.3
Commercial Paper The amount of commercial paper borrowings is limited to the unused borrowing capacity under the
bank credit agreement. Commercial paper is classified as long term because the Company intends to and has the ability
to refinance these borrowings on a long-term basis through either continued commercial paper borrowings or utilization
of the bank credit agreement, which matures in 2012. The weighted-average interest rate on commercial paper
borrowings during 2010 was 0.36%. The weighted-average interest rate on commercial paper borrowing during 2009
was 0.32% and was 0.33% at year-end 2009.
Bank Credit Agreement The Company has a $1,600.0 million credit agreement (as amended) with a syndicate of
banks which has a termination date of June 1, 2012 and provides for two additional one-year extensions of the
termination date. The credit agreement provides (i) to Safeway a $1,350.0 million revolving credit facility (the “Domestic
Facility”), (ii) to Safeway and Canada Safeway Limited a Canadian facility of up to $250.0 million for U.S. Dollar and
Canadian Dollar advances and (iii) to Safeway a $400.0 million sub-facility of the Domestic Facility for issuance of standby
and commercial letters of credit. The credit agreement also provides for an increase in the credit facility commitments up
to an additional $500.0 million, at the option of the lenders and subject to the satisfaction of certain conditions. The
restrictive covenants of the credit agreement limit Safeway with respect to, among other things, creating liens upon its
assets and disposing of material amounts of assets other than in the ordinary course of business. Additionally, the
Company is required to maintain a minimum Adjusted EBITDA, as defined in the credit agreement, to interest expense
ratio of 2.0 to 1 and is required to not exceed an Adjusted Debt (total consolidated debt less cash and cash equivalents in
excess of $75.0 million) to Adjusted EBITDA ratio of 3.5 to 1. As of January 1, 2011, the Company was in compliance
with these covenant requirements. As of January 1, 2011, there were no borrowings, and letters of credit totaled $79.6
million under the Credit Agreement. Total unused borrowing capacity under the credit agreement was $1,520.4 million
as of January 1, 2011.
U.S. borrowings under the credit agreement carry interest at one of the following rates selected by the Company: (1) the
prime rate; (2) a rate based on rates at which Eurodollar deposits are offered to first-class banks by the lenders in the
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