Safeway 2010 Annual Report Download - page 64

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SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
bank credit agreement plus a pricing margin based on the Company’s debt rating or interest coverage ratio (the “Pricing
Margin”); or (3) rates quoted at the discretion of the lenders. Canadian borrowings denominated in U.S. dollars carry
interest at one of the following rates selected by the Company: (a) the Canadian base rate; or (b) the Canadian Eurodollar
rate plus the Pricing Margin. Canadian borrowings denominated in Canadian dollars carry interest at one of the following
rates selected by the Company: (1) the Canadian prime rate; or (2) the rate for Canadian bankers acceptances plus the
Pricing Margin.
During 2010, the Company paid facility fees of 0.05% on the total amount of the credit facility.
Shelf Registration On December 8, 2008, the Company filed a shelf registration statement (the “Shelf”) with the SEC
which enables Safeway to issue an unlimited amount of debt securities and/or common stock. The Shelf expires on
December 8, 2011. The Safeway Board of Directors has authorized issuance of up to $2.5 billion of securities under the
Shelf. As of January 1, 2011, $1.0 billion of securities were available for issuance under the board’s authorization.
Senior Unsecured Indebtedness Pursuant to the Shelf, Safeway issued $500.0 million of 3.95% Notes on August 3,
2010, which mature on August 15, 2020. Additionally, Safeway issued $500.0 million of 5.0% Notes on July 31, 2009,
which mature on August 15, 2019, and $500.0 million of 6.25% Notes on December 17, 2008, which mature on
March 15, 2014.
Mortgage Notes Payable Mortgage notes payable at year-end 2010 have remaining terms ranging from less than one
year to 13 years, had a weighted-average interest rate during 2010 of 7.82% and are secured by properties with a net
book value of approximately $59.8 million.
Other Notes Payable Other notes payable at year-end 2010 have remaining terms ranging from four years to 22 years
and a weighted average interest rate of 6.79% during 2010.
Annual Debt Maturities As of year-end 2010, annual debt maturities (principal payments only, excluding the interest
rate swap fair value adjustment) were as follows (in millions):
2011 $ 505.6
2012 801.7
2013 1.7
2014 751.9
2015 1.9
Thereafter 2,275.0
$ 4,337.8
Letters of Credit The Company had letters of credit of $90.0 million outstanding at year-end 2010, of which $79.6
million were issued under the credit agreement. The letters of credit are maintained primarily to support performance,
payment, deposit or surety obligations of the Company. The Company pays commissions ranging from 0.15% to 1.00%
on the face amount of the letters of credit.
Fair Value At year-end 2010 and year-end 2009, the estimated fair value of debt, including current maturities, was
$4.6 billion and $4.7 billion, respectively.
Note E: Financial Instruments
Safeway manages interest rate risk through the strategic use of fixed- and variable-interest rate debt and, from time to
time, interest rate swaps. The Company does not utilize financial instruments for trading or other speculative purposes,
nor does it utilize leveraged financial instruments.
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