Albertsons 2003 Annual Report Download - page 19

LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $573.6 million, $692.5 million and $611.8 million in fiscal
2003, 2002 and 2001, respectively. The decrease in cash from operating activities in fiscal 2003 from fiscal 2002
is primarily related to changes in deferred taxes resulting from the minimum pension liability in fiscal 2003 and
restructure activities in fiscal 2002.
Net cash used in investing activities was $320.7 million, $224.7 million and $357.2 million in fiscal 2003,
2002, and 2001, respectively. Fiscal 2003 investing activities primarily reflect capital spending to fund retail
store expansion, including the acquisition of Deals stores, distribution maintenance capital and technology
enhancements. Fiscal 2002 investing activities primarily reflect retail expansion, distribution maintenance capital
and technology enhancements.
Net cash used in financing activities was $235.9 million, $466.1 million and $255.1 million in fiscal 2003,
2002 and 2001, respectively. Fiscal 2003 financing activities include the issuance of the $300.0 million 10 year
7.5% Senior Notes, completed in May 2002, the redemption of $173.0 million of the company’s 9.75% Senior
Notes due fiscal 2005 at the redemption price of 102.4375% of the principal amount of the Senior Notes, plus
accrued and unpaid interest, and retirement of the $300.0 million 7.8% bonds that matured in November of 2002
using cash on hand and funds available through its existing credit facilities. Fiscal 2002 financing activities
include the issuance of zero-coupon convertible debentures with a yield of 4.5 percent. The proceeds from the
offering, net of approximately $5.0 million of expenses, were $208.0 million and were initially used to pay down
notes payable and were later used to retire a portion of the $300.0 million in debt that matured in November
2002.
Management expects that the company will continue to replenish operating assets with internally generated
funds. There can be no assurance, however, that the company’s business will continue to generate cash flow at
current levels. The company will continue to obtain short-term financing from its revolving credit agreement
with various financial institutions, as well as through its accounts receivable securitization program. Long-term
financing will be maintained through existing and new debt issuances. The company’s short-term and long-term
financing abilities are believed to be adequate as a supplement to internally generated cash flows to fund its
capital expenditures and acquisitions as opportunities arise. Maturities of debt issued will depend on
management’s views with respect to the relative attractiveness of interest rates at the time of issuance and other
debt maturities.
In April 2002, the company finalized a new three-year, unsecured $650.0 million revolving credit agreement
with rates tied to LIBOR plus 0.650 to 1.400 percent, based on the company’s credit ratings. The agreement
contains various financial covenants including ratios for fixed charge interest coverage, asset coverage and debt
leverage, in addition to a minimum net worth covenant. This credit facility replaced the company’s
$300.0 million and $400.0 million credit facilities, which had expiration dates in August and October of 2002,
respectively. The company had no outstanding borrowings under this credit facility at February 22, 2003 and
February 23, 2002. As of February 22, 2003, letters of credit outstanding under the credit facility were
$129.0 million and the unused available credit under the facility was $521.0 million.
In May 2002, the company completed the issuance of the $300.0 million 10-year 7.50% Senior Notes. A
portion of the proceeds was used to redeem the company’s 9.75% Senior Notes due fiscal 2005 on June 17, 2002.
In November 2002, the company retired its $300.0 million 7.80% note that matured in November 2002.
In August 2002, the company renewed its annual accounts receivable securitization program, under which
the company can borrow up to $200.0 million on a revolving basis, with borrowings secured by eligible accounts
receivable. Outstanding borrowings under this program as of February 22, 2003 and February 23, 2002 were
$80.0 million and $0, respectively, and are reflected in Notes Payable in the Consolidated Balance Sheets.
In November 2001, the company sold zero-coupon convertible debentures having an aggregate principal
amount at maturity of $811.0 million. The proceeds from the offering, net of approximately $5.0 million of
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