Albertsons 2005 Annual Report Download - page 23

Net cash used in investing activities was $161.8 million, $271.6 million and $330.6 million in fiscal 2005,
2004 and 2003, respectively. Fiscal 2005 and 2004 investing activities primarily reflect capital spending to fund
retail store expansion, store remodeling and technology enhancements. Fiscal 2005 activities also include the
acquisition of Total Logistics and the proceeds from the sale of WinCo.
Net cash used in financing activities was $457.8 million, $312.5 million, and $235.9 million in fiscal 2005,
2004 and 2003, respectively. Fiscal 2005 financing activities primarily reflect the early redemption of $250.0
million of the company’s 7.625 percent notes due in September 2004, the payment of approximately $60 million
in Total Logistics assumed debt, the payment of dividends of $80.2 million and the purchase of treasury shares of
$56.0 million. Fiscal 2004 financing activities primarily reflect the early redemption of $100.0 million of the
company’s 8.875 percent notes due in 2022 at the redemption price of 103.956 percent of the principal amount of
the notes, the net reduction in notes payable of $80.0 million, the payment of dividends of $77.0 million and the
purchase of treasury shares of $14.6 million.
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.
As of February 26, 2005, the company’s current portion of outstanding debt including obligations under
capital leases was $99.5 million. The company had no outstanding borrowings under its unsecured $650.0
million revolving credit facility. Letters of credit outstanding under the credit facility were $141.5 million and the
unused available credit under the facility was $508.5 million. The company also had $27.1 million of outstanding
letters of credit issued under separate agreements with financial institutions.
Subsequent to fiscal year-end, on February 28, 2005, the company executed a five year unsecured $750.0
million revolving credit agreement replacing the previous $650.0 million revolving credit agreement which was
terminated. Amounts utilized under this credit agreement have rates tied to LIBOR plus 0.275 to 0.675 percent
and there are facility fees ranging from 0.10% to 0.20% on the total amount of the facility, both based on the
company’s credit ratings. The agreement contains various financial covenants including ratios for interest
coverage and debt leverage. All letters of credit that had been issued and outstanding under the previous credit
facility were transferred under the new credit facility.
On May 3, 2004, the company voluntarily redeemed $250 million of 7.625 percent notes due September 15,
2004, in accordance with the note redemption provisions.
In August 2004, 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. No borrowings were outstanding under this program at February 26, 2005 and February 28, 2004.
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
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. The debentures mature in 30 years and are
callable at the company’s option on or after October 1, 2006. Holders may require the company to purchase all or
a portion of their debentures on October 1, 2006 or October 1, 2011 at a purchase price equal to the accreted
value of the debentures, which includes accrued and unpaid cash interest. If the option is exercised, the company
has the choice of paying the holder in cash, common stock or a combination of the two. Generally, except upon
the occurrence of specified events, holders of the debentures are not entitled to exercise their conversion rights
until the closing price of the company’s common stock on the New York Stock Exchange for twenty of the last
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