Safeway 2002 Annual Report Download - page 40

38 SAFEWAY INC. 2002 ANNUAL REPORT
In January 2001, Safeway issued senior unsecured debt
facilities consisting of 7.25% debentures due 2031.
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. On September
15, 2002, the 7.00% Notes, due 2002, were paid.
In 1998 Safeway issued senior unsecured debt facilities
consisting of 5.75% Notes due 2000, 5.875% Notes due
2001, 6.05% Notes due 2003 and 6.50% Notes due 2008.
On November 15, 2001, the 5.875% Notes were paid and on
November 15, 2000, the 5.75% Notes, due 2002, were paid.
In 1997 Safeway issued senior unsecured debt facilities
consisting of 6.85% Senior Notes due 2004, 7.00% Senior
Notes due 2007 and 7.45% Senior Debentures due 2027.
SENIOR SUBORDINATED INDEBTEDNESS The 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 and mortgage notes payable.
MORTGAGE NOTES PAYABLE Mortgage notes payable at
year-end 2002 have remaining terms ranging from one to
21 years, have a weighted average interest rate of 8.94% and
are secured by properties with a net book value of approxi-
mately $131 million.
OTHER NOTES PAYABLE Other notes payable at year-end
2002 have remaining terms ranging from one to seven years
and a weighted average interest rate of 4.75%.
ANNUAL DEBT MATURITIES As of year-end 2002, annual
debt maturities were as follows (in millions):
2003 $ 780.3
2004 699.6
2005 232.5
2006 2,479.7
2007 785.0
Thereafter 2,812.4
$7,789.5
LETTERS OF CREDIT The Company had letters of credit
of $148.0 million outstanding at year-end 2002, of which
$35.9 million were issued under the bank credit agreement.
The letters of credit are maintained primarily to support
performance, payment, deposit or surety obligations of the
Company. The Company pays commitment fees ranging
from 0.15% to 1.00% on the outstanding letters of credit.
NOTE F: LEASE OBLIGATIONS
Approximately two-thirds of the premises that the Company
occupies are leased. The Company had approximately
1,500 leases at year-end 2002, including approximately 180
that 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 approxi-
mate fair market value.
As of year-end 2002, 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
2003 $ 79.7 $ 341.7
2004 79.1 332.7
2005 77.8 317.1
2006 75.6 299.4
2007 72.6 279.5
Thereafter 749.2 2,542.7
Total minimum lease payments 1,134.0 $4,113.1
Less amounts representing interest (596.5)
Present value of net minimum lease payments 537.5
Less current obligations (25.2)
Long-term obligations $ 512.3
Future minimum lease payments under non-cancelable
capital and operating lease agreements have not been reduced
by minimum sublease rental income of $206.8 million.
Amortization expense for property under capital leases was
$23.7 million in 2002, $16.7 million in 2001 and $20.1 mil-
lion in 2000. Accumulated amortization of property under
capital leases was $62.4 million at year-end 2002 and $49.6
million at year-end 2001.