Safeway 2006 Annual Report Download - page 66

SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 2006 the Company paid facility fees ranging from 0.06% to 0.10% on the total amount of the credit facility.
Shelf Registration In 2004 the Company filed a shelf registration statement covering the issuance from time to
time of up to $2.3 billion of debt securities and/or common stock. As of December 30, 2006, $1.3 billion of securities
was available for issuance under the shelf registration. The Company may issue debt or common stock in the future
depending on market conditions, the need to refinance existing debt and capital expenditure plans or other investing
activities.
Other Bank Borrowings Other bank borrowings had a weighted average interest rate during 2006 of 7.07%.
Mortgage Notes Payable Mortgage notes payable at year-end 2006 have remaining terms ranging from six
months to 17 years, had a weighted average interest rate during 2006 of 8.51% and are secured by properties with a
net book value of approximately $121.5 million.
Senior Secured Indebtedness The 9.30% Senior Secured Debentures were due and paid in February 2007 and
were secured by a deed of trust that created a lien on the land, buildings and equipment owned by Safeway at its
distribution center in Tracy, California.
Senior Unsecured Indebtedness Pursuant to the shelf registration described above, in March 2006, the Company
issued senior unsecured debt consisting of $250.0 million of Floating Rate Notes due 2009. The interest rate was
5.71% as of December 30, 2006.
In November 2005, the Company issued senior unsecured debt in Canada consisting of CAD300 million (USD257.8
million at December 30, 2006) of 4.45% Notes due 2008.
In August 2004, under the shelf registration described above, Safeway issued senior unsecured debt securities
consisting of $500.0 million of 4.95% Notes due 2010 and $250 million of 5.625% Notes due 2014.
Senior Subordinated Indebtedness The 9.875% Senior Subordinated Debentures due 2007 are subordinated in
right of payment to, among other things, the Company’s borrowings under the Credit Agreement, the 9.30% Senior
Secured Debentures, the senior unsecured indebtedness and mortgage notes payable.
Other Notes Payable Other notes payable at year-end 2006 have remaining terms ranging from six months to 16
years and a weighted average interest rate of 3.67% during 2006.
Fair Value Hedges The Company effectively converted $500 million of its 4.95% fixed-rate debt to floating-rate
debt through an interest swap agreement in 2004. In 2003 the Company effectively converted $300.0 million of its
4.125% fixed-rate debt to floating-rate debt through an interest rate swap agreement. These swaps are designated as
fair value hedges of fixed-rate debt. For these fair value hedges that qualify for hedge accounting treatment, Safeway
uses the short-cut method, and thus, there are no gains or losses recognized due to hedge ineffectiveness. Unrealized
gains or losses from changes in the value of fair value hedges are offset by changes in the fair value of the hedged
underlying debt.
Annual Debt Maturities As of year-end 2006, annual debt maturities were as follows (in millions):
2007 $ 790.7
2008 811.6
2009 752.4
2010 501.7
2011 554.5
Thereafter 1,808.5
$5,219.4
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