Safeway 1999 Annual Report Download - page 33

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Senior Unsecured Indebtedness In September 1999,
Safeway issued senior unsecured debt facilities consisting
of 7.00% Notes due 2002, 7.25% Notes due 2004, and
7.5% Notes due 2009.
In 1998 Safeway issued senior unsecured debt securities
consisting of 5.75% Notes due 2000, 5.875% Notes due
2001, 6.05% Notes due 2003, and 6.5% Notes due 2008.
In 1997 Safeway issued senior unsecured debt securi-
ties consisting of 6.85% Senior Notes due 2004, 7.00%
Senior Notes due 2007, and 7.45% Senior Debentures due
2027. The Company used the proceeds from this debt to
redeem a portion of the Senior Subordinated Indebtedness,
described below.
Senior Subordinated Indebtedness The 10% Senior
Subordinated Notes due 2001, 9.65% Senior Subordinated
Debentures due 2004, and 9.875% Senior Subordinated
Debentures due 2007 are subordinated in right of payment
to, among other things, the Company’s borrowings under
the bank credit agreement, the 9.30% Senior Secured
Debentures, the Senior Unsecured Indebtedness, and mort-
gage notes payable.
Mortgage Notes Payable Mortgage notes payable at
year-end 1999 have remaining terms ranging from one to
19 years, have a weighted average interest rate of 8.64%
and are secured by properties with a net book value of
approximately $298 million.
Other Notes Payable Other notes payable at year-end
1999 have remaining terms ranging from one to 10 years
and a weighted average interest rate of 7.28%.
Redemptions During 1997, the Company redeemed
$588.5 million of the Senior Subordinated Indebtedness,
$285.5 million of Vons’ public debt, and $40.0 million of
medium-term notes using proceeds from the Senior
Unsecured Indebtedness and commercial paper program.
In connection with this redemption, Safeway recorded an
extraordinary loss of $64.1 million ($0.13 per share). The
extraordinary loss represents the payment of redemption
premiums and the write-off of deferred finance costs, net of
the related tax benefits.
Annual Debt Maturities As of year-end 1999, annual
debt maturities were as follows (in millions):
2000 $ 557.1
2001 548.6
2002 3,071.0
2003 377.2
2004 700.0
Thereafter 1,225.2
$ 6,479.1
Letters of Credit The Company had letters of credit of
$89.3 million outstanding at year-end 1999 of which $46.3
million were issued under the bank credit agreement. The
letters of credit are maintained primarily to support per-
formance, payment, deposit, or surety obligations of the
Company. The Company pays commitment fees ranging
from 0.15% to 1.00% on the outstanding portion of the let-
ters of credit.
Note D: Lease Obligations
Approximately two-thirds of the premises that the
Company occupies are leased. The Company had approxi-
mately 1,600 leases at year-end 1999, including approxi-
mately 220 which are capitalized for financial reporting
purposes. Most leases have renewal options, some with
terms and conditions similar to the original lease, others
with reduced rental rates during the option periods.
Certain of these leases contain options to purchase the
property at amounts that approximate fair market value.
As of year-end 1999, future minimum rental payments
applicable to non-cancelable capital and operating leases
with remaining terms in excess of one year were as follows
(in millions):
Capital Operating
Leases Leases
2000 $ 91.0 $ 325.8
2001 97.9 302.7
2002 77.0 306.2
2003 72.6 289.1
2004 77.9 264.4
Thereafter 460.9 2,482.5
■■■■■■■■■
Total minimum lease payments 877.3 $3,970.7
■■■■■■■■■
Less amounts representing interest (400.1)
■■■■■■■■■
Present value of net minimum
lease payments 477.2
Less current obligations (41.8)
■■■■■■■■■
Long-term obligations $435.4■■■■■■■■■
Future minimum lease payments under non-cancelable
capital and operating lease agreements have not been reduced
by minimum sublease rental income of $241.8 million.
Amortization expense for property under capital leases
was $38.5 million in 1999, $22.3 million in 1998 and
$21.1 million in 1997. Accumulated amortization of prop-
erty under capital leases was $132.3 million at year-end
1999 and $136.1 million at year-end 1998.