Safeway 1999 Annual Report Download - page 32

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Acquisitions as purchases. Under purchase accounting, the
purchase price is allocated to acquired assets and liabilities
based on their estimated fair values at the date of acquisi-
tion, and any excess is allocated to goodwill.
For Randall’s and Carrs, such allocations are subject to
final determination based on real estate, leasehold and
equipment valuation studies, and a review of the books,
records and accounting policies of Randall’s and Carrs,
which are expected to be complete before the end of the
third quarter and first quarter of fiscal 2000, respectively.
Accordingly, the final allocations may be different from the
amount reflected herein, although management does not
expect such differences to be material.
Pro Forma
(in millions, except per-share amounts) 1999 1998
Sales $30,801.8 $29,474.1
Net income $ 95 7.6 $ 706.2
Diluted earnings per share:
Net income $ 1.82 $ 1.42
Note C: Financing
Notes and debentures were composed of the following at
year-end (in millions):
199 9 1998
Commercial paper $ 2 ,3 58 .1 $ 1,745.0
Bank credit agreement, unsecured 75.7 89.1
9.30% Senior Secured
Debentures due 2007 24 .3 24.3
6.85% Senior Notes due 2004, unsecured 200.0 200.0
7.00% Senior Notes due 2007, unsecured 250.0 250.0
7.45% Senior Debentures
due 2027, unsecured 150.0 150.0
5.75% Senior Notes due 2000, unsecured 400.0 400.0
5.875% Senior Notes due 2001, unsecured 400.0 400.0
6.05% Senior Notes due 2003, unsecured 350.0 350.0
6.50% Senior Notes due 2008, unsecured 250.0 250.0
7.00% Senior Notes due 2002, unsecured 600.0 –
7.25% Senior Notes due 2004, unsecured 400.0 –
7.50% Senior Notes due 2009, unsecured 500.0 –
9.35% Senior Subordinated Notes
due 1999, unsecured –66.7
10% Senior Subordinated Notes
due 2001, unsecured 79 .9 79.9
9.65% Senior Subordinated Debentures
due 2004, unsecured 81 .2 81.2
9.875% Senior Subordinated Debentures
due 2007, unsecured 24 .2 24.2
10% Senior Notes due 2002, unsecured 6.1 6.1
Mortgage notes payable, secured 75 .6 115.9
Other notes payable, unsecured 98 .8 102.7
Medium-term notes, unsecured 25 .5 25.5
Short-term bank borrowings, unsecured 129.7 161.8
■■■■■■■■■
6,479.1 4,522.4
Less current maturities (557.1) (279.8)
■■■■■■■■■
Long-term portion $ 5, 92 2.0 $ 4,242.6
■■■■■■■■■
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 2002. The weighted average interest rate
on commercial paper borrowings was 5.37% during 1999
and 6.79% at year-end 1999.
Bank Credit Agreement Safeway’s total borrowing
capacity under the bank credit agreement is $3.0 billion.
Of the $3.0 billion credit line, $2.0 billion matures in
2002 and has two one-year extension options, and $1.0 bil-
lion is renewable annually through 2004. The restrictive
covenants of the bank 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. Safeway is also
required to meet certain financial tests under the bank
credit agreement. At year-end 1999, the Company had
total unused borrowing capacity under the bank credit
agreement of $520 million.
U.S. borrowings under the bank credit agreement carry
interest at one of the following rates selected by the
Company: (i) the prime rate; (ii) a rate based on rates at
which Eurodollar deposits are offered to first-class banks
by the lenders in the bank credit agreement plus a pricing
margin based on the Company’s debt rating or interest cov-
erage ratio (the “Pricing Margin”); or (iii) rates quoted at
the discretion of the lenders. Canadian borrowings denomi-
nated 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: (i) the Canadian prime rate or (ii) the rate
for Canadian bankers acceptances plus the Pricing Margin.
The weighted average interest rate on borrowings under
the bank credit agreement was 5.59% during 1999 and
5.18% at year-end 1999.
Senior Secured Indebtedness The 9.30% Senior
Secured Debentures due 2007 are secured by a deed of
trust which created a lien on the land, buildings and
equipment owned by Safeway at its distribution center in
Tracy, California.