Safeway 2007 Annual Report Download - page 49

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SAFEWAY INC. AND SUBSIDIARIES
The computation of Adjusted EBITDA, as defined by the Credit Agreement, is provided below solely to provide an
understanding of the impact that Adjusted EBITDA has on Safeway’s ability to borrow under the Credit Agreement.
Adjusted EBITDA should not be considered as an alternative to net income or cash flow from operating activities (which
are determined in accordance with GAAP) as an indicator of operating performance or a measure of liquidity. Other
companies may define Adjusted EBITDA differently and, as a result, such measures may not be comparable to Safeway’s
Adjusted EBITDA (dollars in millions).
52 weeks
2007
Adjusted EBITDA:
Net income $ 888.4
Add (subtract):
Income taxes 515.2
Interest expense 388.9
Depreciation 1,071.2
LIFO expense 13.9
Stock option expense 48.4
Property impairment charges 27.1
Equity in earnings of unconsolidated affiliates (8.7)
Dividend received from unconsolidated affiliate 8.9
Total Adjusted EBITDA $ 2,953.3
Adjusted EBITDA as a multiple of interest expense 7.59x
Total debt at year-end 2007 $ 5,655.1
Less cash and equivalents in excess of $75.0 at December 29, 2007 (202.8)
Adjusted Debt $ 5,452.3
Adjusted Debt to Adjusted EBITDA 1.85x
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 29, 2007, $825.0 million of securities were
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.
Pursuant to the shelf registration, Safeway issued $500.0 million of 6.35% Notes (the “Notes”) on August 17, 2007. The
Notes mature on August 15, 2017. The Company will pay interest on the Notes on February 15 and August 15 of each
year. Interest payments commenced on February 15, 2008. Safeway used the net proceeds from the Notes to repay
borrowings under its U.S. commercial paper program which had been used to repay $480.0 million of Senior Notes which
matured in July 2007. At Safeway’s option, the Notes can be redeemed, in whole or in part, at any time at a redemption
price equal to the greater of 100% of the principal amount of the Notes to be redeemed, or the sum of the present
values of the remaining scheduled payments of principal and interest on the Notes to be redeemed. Additionally, Safeway
will be required to offer payment in cash equal to 101% of the aggregate principal amount of the Notes, plus accrued
and unpaid interest, upon change of control as described in the terms of the Notes.
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